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I am a recent college grad and started my own IT consulting business. I have a car loan from about two years ago and my cellular and utility bills are my only expenses. However, when I look at my credit report none of these are indicated on it. What should I do to make sure the correct info is there? Any tips on how to boost my score?
- K. Bryant
We’ve seen those commercials on TV with the songs about your credit score and how to get your credit report information. It’s understandable if you change the channel—those jingles can stay in your head for hours on end. However, knowing your way around your credit report and score is essential to a healthy financial future.
To begin, your credit score is a result of a mathematical equation that crunches facts and a whole lot of statistical information from your credit report. The information is tracked by your social security number and most of it is financial -- to whom you owe money, how quickly you pay off debts, the balances in your bank account, any debt turned over to collection agencies and any recent bankruptcy. Also included is your history of employment, marital status, lawsuits, arrests and convictions.
Knowing this FICO score, or Fair Isaac Company score, is vital. It can range between 300 and 850. The higher the score, the better it is for you in getting attractive interest rates. It is used by lenders, such as banks or credit unions, to determine how big a risk you are in terms of loaning money. You can get your annual, free report from each of the three main credit bureaus -- Experian, Equifax and TransUnion.
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Unless you’ve recently been a victim of identity fraud, you should check your credit score only once or twice a year. If you check it more frequently, this can send red flags to lenders and actually make your score go down because it makes you seem like a bigger risk.
What should you do if you get your report and see wrong information?
“If you see that there are mistakes, you definitely want to contact the credit bureau and … get it removed from your report,” said Scott Scredon, the public relations director at Consumer Credit Counseling Service of Greater Atlanta.
Steve Bucci, author of Credit Repair for Dummies, said don’t give up. It may take a few attempts before the report is corrected.
“You can dispute any information that you believe is an error or is too old and they will investigate,” Bucci said.
“Sometimes you’ll have to go thru this process more than once, so don’t be discouraged.”
If your score is low but not on account of any errors, fear not, free help is available.
“No matter where you live in the country, there are non-profit credit agencies that speak to people for free and give them advice,” said Scredon. “If you have too much credit card debt or you’re in trouble on your mortgage, you can get a free, one hour session with a counselor for recommendations.”
So while you can ignore annoying commercials with a flip of your remote, your credit history is something that deserves your undivided attention. It would be a bummer if down the road you were to miss out on owning a home or starting your own business because of mistakes you made when you were young.
“This is not like cutting class,” said Bucci. “Credit history is affected by big changes in score [made] by relatively small things.”
E-mail your questions to Money101@FOXBusiness.com, and let us take off some of the pressure.