Credit Report/Credit Score

[bobv]

Having just gone through week 5 of Financial Peace University where Dave Ramsey speaks about credit scores, credit reports, creditors etc... someone in the class asked about the importance of having a good credit score and a history on your credit report when buying a new home or even renting an apartment. Even Dave says during the class that as a multi-millionaire, while he could buy the apartment complex, he might not be able to rent one because he is debt free and has been for some time. (My daughter is in that point in her life now.... she is out of college, totally debt free, no credit cards, an established emergency fund, and a solid job).

[pochax]

i am glad to hear that even Dave Ramsey would admit that (as ironic as that might be that he can't rent the apt but he can BUY the apartment complex!). i don't doubt both the financial and psychological benefits of being debt-free, however, i would hope that even Dave would admit his approach is not for everyone (although i am not sure he would admit that). i would agree that having a great credit score is not the end-all/be-all to financial freedom/success, but it certainly can be a great tool to getting there. i think one must search within themselves deep and hard to know how living/being in debt will affect them - will it make one more likely to spend beyond their means? will they think all that indebted money is actually theirs to spend? if so, one should probably avoid or at least establish some checks-and-balances and accountability (spouses, good friends, family) in place before going into that debt.

for everyone out there, remember that the only place you can truly get your free credit report (not credit SCORE, but credit REPORT) is:
http://www.annualcreditreport.com

[bob]

yea, and I will just add that you should stay away from FreeCreditreport.com - ironically - it isn't free

[lrgche]

You can do a soft check on of your credit score using a website called CreditKarma.com

This helps you keep up with where you are at and how it changes over time without negatively impacting the actual score from hard credit checks.

[mcelizabeth]

I've heard Dave Ramsey say your FICO is your "I love debt" score because you have to keep getting in debt for the score to be good.

I believe the truly free credit report site is annualcreditreport.com. I heard someone recommend you check one of the three credit reporting agencies every four months through this site. Then you will have free frequent monitoring of your credit history. I don't think the FICO score is free though.

[geekgirl4god]

Having just purchased a home a year ago I can speak to the importance of credit scores. When our home was being built, there was an error on my husband's credit score which made it around 650, but we were able to get that resolved before we purchased and his credit score went to 750, which is about where mine is. Before his score changed however, our loan was going to be at 6.5%, and we were told that we probably wouldn't get approved. Afterwards our loan went to 6% and we were approved without a problem. We eventually were able to get the loan down to 5.5% with a larger down payment, but the credit score had a large impact.

One word of caution though, we both had credit and were using it in a responsible manner. I had a credit card that I payed in full every month that was my only card and I had it for 5 years, and my husband had a school loan that we payed off a few months after we purchased the house. Never go into debt just to improve your credit score, if you can handle a credit card responsibly, that is probably the best way to go, unless you own a home, which works even better.

[CoolHappyGuy]

Another benefit of having a good credit rating is lower insurance premiums. Many insurers are using credit scores as an underwriting criterion. Privacy advocates may hiss but I have seen my car insurance decrease significantly over the same timeframe in which they have started using credit scores.

[pochax]

I just checked my Equifax credit report last week from http://www.annualcreditreport.com and found:
1) one wrong number that i have never had
2) 3 "previous home addresses" that i have never lived at

this is in addition to the student loan that i never took out when i checked my credit report 4 years ago. geesh...the stuff you will find on these things!

[barbaraerik]

Thanks for this report. I glad to see this here.....