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16: Credit Score and Reports 101

Updated: Aug 23, 2022

Alfred Hitchcock was terrified of eggs.

They might seem mysterious, but it turns out they’re vital to your financial health.

  1. Why is it important? It is what the lenders are looking at so shouldn’t you know? If you want to do anything in your financial life such as: open a new credit card, get a new cell phone, rent an apartment, get a new job, buy a new house, refinance your mortgage, take out a student loan, borrow for small business.

  2. What is your Credit Score? Your credit score is determined by Fair Isaac Corporation which came up with the method for calculating credit scores based on information collected by credit reporting agencies. It is out of 850. Anything over 750 is considered excellent. If you have a low credit score, it means that it is harder for you to borrow money or you will be charged a higher interest rate. The two main items that make up your credit score are PAYING YOUR BILLS ON TIME AND HOW MUCH CREDIT YOU HAVE ACCESS TO. I.E. if you have a credit limit of $5,000 and owe $2,500, your limit is 50%. The lower your limit; the better.

  3. What is your Credit Report? This is the report from the three credit agencies: Experian, Equifax and Transunion. They list everyone you have borrowed money from for the last 7 years. It also lists if you paid on time. The three agencies aren’t exactly the same so you have to run a report from all three.

  4. How often should I check my credit and where should I check? If you haven’t checked in over a year, then do so immediately. Once a year is plenty. If you are borrowing money (i.e. getting a mortgage, student loan), they will have a recent report for you. If not, you can get a FREE credit report at from each of the three agencies once a year. You can buy it (stick to once a year) at or Also, many credit cards (i.e. Barclay’s, Citibank) offer it as a benefit to card members.

  5. What if my report has a mistake? 50% of reports have mistakes. You have to fix them with the agency directly.

  6. How do I raise my credit score? The best way to raise your credit score is to pay off all your debts, pay your credit card balances in full by the 20th and if you have a late payment, call the credit card company and ask them to take it off (yes - it works sometimes). You can also ask your credit card for a higher limit. Just don’t charge extra.

  7. Why does my score keep changing? Your credit scores are a snapshot in time that changes based on your credit behaviors and the information in your credit reports, which is updated regularly.

  8. Should I close old credit cards to raise my score? it's best to keep unused credit cards open so that you benefit from a longer average credit history and a larger amount of available credit. Just don’t use them!

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