Credit scores are one of those things that everybody talks about occasionally, but nobody really understands. People may have a vague idea that they have a “pretty decent” credit score, but generally they don’t really know what that means.
Credit scores in the United States range from 300 to 850; a good score is anything over 700. Anyone with a score under 650 will have a more difficult time finding credit and will pay more for it. Credit scores over 720, on the other hand, are considered excellent and will help you get the lowest rates.
Most people know that they’re entitled to a free credit report every year, but many don’t know where to get one or just don’t bother. Making things worse, a number of scam sites on the Internet promise a free credit report if you’ll just give them your credit card information, after which you’ll find yourself subscribing to their credit monitoring service at $69.99 per month. Checking the actual site at annualcreditreport.com will get you your free report with no credit card required, although this includes only the report itself and not your credit scores (which can be purchased separately for a somewhat reasonable fee).
It’s important to check your credit report occasionally, so that you can dispute any inaccurate information that shows up; such faulty info could increase the amount you have to pay for any number of things and could even cost you a job, as many employers now check your credit report before making an offer of employment. Disputing information is easy: just send a registered letter to the credit bureau telling them that the item is incorrect. Whoever placed the item there then has a limited amount of time to justify it, after which it must be removed. Note that you do not have to tell them how it is incorrect, only that it is.
Keeping a good credit score can save you thousands and thousands of dollars over your lifetime. Don’t screw it up!