Posted by: thecreditmaven | July 17, 2008

What’s So Important About A Credit Score?

So what’s your credit score – 550, 780, 610, 826?

What is so darn important about a three digit score? Is the information on my report correct? Why does my report even need to have a score at all?

All very good questions indeed.

The importance of your three digit score is this – it will either:

A – Let you have access to the best financing options available, or
B – It will limit those options and those options will cost you more out of your pocket.

Which would you prefer? The former, of course.

According to PIRG (Public Information Research Group, Washington, DC):

* Seventy-nine percent (79%) of credit reports contain errors or mistakes

* Twenty-nine percent (29%) of credit reports contain serious errors, false delinquencies, or accounts that did not belong to the consumer

* Twenty percent (20%) of credit reports were missing major credit, loan, mortgage or other information to demonstrate the credit worthiness of the consumer

Download the Full Report

SAY WHAT?? IS THAT TRUE??

A study performed by the Consumer Federation of America and the National Credit Reporting Agency on 502,623 consumers seeking mortgage credit found:

“Wide variations in the credit scores for a given consumer among the three national credit repositories (Experian, Equifax, and Trans Union):

  • the AVERAGE DISCREPANCY for all consumers was 41 points
  • credit scores for nearly ONE in THREE consumers varied by 50 points or more
  • credit scores for ONE in TWENTY-FIVE consumers varied by 100 points or more

Download testimony of Stephen Brobeck Executive Director of the Consumer Federation of America

When was the last time you checked the accuracy of the information on your credit report?

2 months ago – 2 years ago – 2 days ago – NEVER?

Who is responsible for ensuring that the information on your credit report is accurate?

The Credit Bureaus – Your Creditors – The Government – Your Mom & Dad?

The reason that everyone has a credit score is to be “categorized”. High scores get to call the shots, Middle scores have a little say-so and Low scores will have to take what they can get (if they can get anything at all).

Everyone has the potential to have a 700+ credit score.

According to Experian’s National Score Index – the average credit score in the US is 693. This number was calculated from a representative sample of 3 million US consumer’s credit profiles.

It would be great if a neutral third party organization were able to calculate the average credit score in the US. It’s hard for me to accept the average credit score is 693 when foreclosures, delinquencies, and bankruptcies are increasing.

So, back to the original question – “What is so important about a 3 digit score?”

Your financial future, financing options, and your feeling of self-worth are extremely dependent on which “Category” your credit score resides.

Make sense?

“As a financial professional and consumer advocate, I have an educational mission; my purpose is to not only assist consumers who want to improve their overall credit standing, but to elevate the practice of credit management.”

~ Robert Landreth

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Responses

  1. Makes total sense. Nice job.

  2. Your blog is interesting!

    Keep up the good work!

  3. Great and useful info. THANKS


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