[July 10, 2018] |
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Take Charge America Shares Surprising Facts About Your Credit Score
Most people know their credit score is an important factor in securing a
mortgage, auto loan or even an apartment. They also know that missing a
credit card or loan payment can damage their score. However, there are
other lesser-known facts that could make or break that three-digit
number.
"Nothing affects your financial health more than your credit score,"
said Michael Sullivan, a personal finance consultant with Take Charge
America, a national
nonprofit credit counseling and debt management agency. "But there's
a lot of mystery surrounding credit scores, including how scores
increase or decrease."
Sullivan sheds light on eight surprising facts about your credit score:
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It affects insurance rates: In many states, insurers base your
rates on your credit score. If it's 700 or better, you can lock in the
best prices. Likewise, a score below 600 means higher insurance rates.
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Employers may review your credit: If you're applying for a job
requiring a security check, expect the company to check your credit
report and score, too. If you're hoping to work in the financial
services industry, you most likely need a good score to secure a job.
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It won't improve if you cancel a credit card: It may seem
counterintuitive, but closing
an old credit card can actually hurt your credit score because it
impacts your credit utilization, which is a factor in determining the
score.
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Overdue library fines can affect your score: You might be
shocked to learn that libraries often work with debt collectors to
collect fines. And while libraries don't report to credit bureaus,
collection agencies do.
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So can outstanding medical bills: Similarly, unpaid medical
bills are sent to collection agencies and have the same effect on
scores.
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No debt does not equal good credit: Many people assume that
having no credit cards or other debt will get them a higher credit
score, but this isn't true. Without a history of past debts and
repayments, creditors can't predict how you will repay your debt. This
makes it difficult to secure a loan. On the other hand, running up a
bunch of credit card debt won't help your situation either. Aim to pay
off all balances monthly.
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Neither does a hefty savings account. Your account balance has
no bearing on your credit score.
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Errors are common: The Federal Trade Commission reports that
more than 20 percent of Americans have a "potentially material error
in their credit report," meaning their score may be lower than it
should be. Not surprisingly, credit reporting is the second biggest
source of complaints to the Consumer Financial Protection Bureau. It's
important to review your report at least once a year to check for
errors. You can request a free report from each of the three credit
bureaus annually at annualcreditreport.com.
For more tips or information about credit counseling, budgeting, debt
relief or student loans, visit takechargeamerica.org
or call (866) 528-0588.
About Take Charge America, Inc.
Founded in 1987, Take Charge America, Inc. is a nonprofit agency
offering financial education and counseling services including credit
counseling, debt management, student loan counseling, housing counseling
and bankruptcy counseling. It has helped more than 1.6 million consumers
nationwide manage their personal finances and debts. To learn more,
visit www.takechargeamerica.org
or call (888) 822-9193.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180710005257/en/
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