Chances are you have more than enough studying and research to keep you busy—you don’t have all kinds of free time to explore the mysteries of your credit score. But considering how important your credit history will be for the next 40 or 50 years, it might be wise to brush up on the facts.
We’ll try to make this quick and easy. Just keep checking back each week for a new lesson.
Once I get a bad credit score, there is nothing I can do to increase it.
FICTION
Your credit score is constantly changing. When credit is run, it is a quick picture of your credit at that moment in time. As you pay down balances or apply for a new credit card your score will change. The best way to increase your credit score is to pay down your debt. It’s really that simple.
A great way to keep on track of your credit is to pull your credit report yearly for free! I live in VA and a new law passed that allows us to get our credit report from all three companies for free 1x a year. (annualcreditreport.com)
Check to see if your state has the same law... This does not give you your *score* for free but does allow you to check for mistakes on the actual report.
On that note, keep the store credit cards to a minimum and if at all possible do not open any.
Even if you close them or never use them they can affect your regular credit score. AND, some insurance companies have a credit checking system that negatively looks upon any that you've opened - EVER. Apparently, people who open store credit cards are a higher insurance risk? I know... I thought talking on the cell phone was risky, not my Macy's card.
If you've already made the mistake like I did, do note that some insurance companies do not look at your credit score and therefore would not care about how many store cards you have. I'm using GMAC and they do not. It significantly lowered my rates to search around.
I found out, when applying for new car insurance, that your credit score can differ between the three main credit companies - because they all have slightly different ways of measuring. Even though rates are constantly in flux, it is good to get copies of your report (one from each of the three companies) to understand the changes.