The purpose of “Credit” is to understand the importance of having good credit for important life purchases, identify credit types, learn how to boost credit score using the Experian Boost Program (Check Your Free Credit Report & FICO® Score – Experian), learn about the role of credit as it relates to one’s life, determine how credit may affect one’s ability to obtain housing, acquire information about the factors involved in calculating credit, learn what is determined a good credit score, know about VantageScore and FICO scores and a little bit about how they work, understand how soft and hard credit inquiries can affect credit scores, identify free credit reports and scores, and find reliable information for credit-related issues, including free financial education and credit repairing resources and guidance.
According to Experian, “Credit is the ability to borrow money or access goods or services with the understanding that you’ll pay later (par. 1).”
There are four major types of credit, which include revolving credit for things you pay partially, but then have a balance to pay off, charge cards that require full payments to be paid each payment cycle, service credit with services such as utility companies that provide service where service is provided upfront with the expectation that fees will be paid afterward; installment credit for loans that often have fees that need to be paid in a series of monthly payments, such as student, mortgage and vehicle loans.
In order to borrow money for major purchases, such as a car or home, a higher level of credit is needed. Credit is used for all kinds of factors. For instance, landlords use credit to determine how much to charge for deposits. Utility companies may check credit to determine if one may open an account, borrow equipment or determine the cost of deposit to start service. Insurance may use credit to determine rates. As incredible as this may seem, employers may use credit to determine if you are worthy of hiring. And credit isn’t something that someone can build overnight. It can take years to develop and increase credit scores.
For those looking to boost their credit scores with cell phone and utility payment records, the Experian Boost program takes these records into consideration, based on Experian data.
According to Credit.com, there are five factors to consider for calculating one’s credit score: Payment history; credit utilization; age of credit; types of accounts; application history.
(How Is My Credit Score Calculated? | Credit.com). “VantageScore creates a single tri-bureau model that can be used with a credit report from Experian, Equifax or TransUnion” while “FICO® creates bureau-specific scoring models” (par. 7). Per Experian, “…on the 300-to-850 scale, a score of at least 670 (for FICO®) and 700 (for VantageScore) will generally qualify as having good credit (par. 16)
MyFico writes, “Soft inquiries such as viewing your own credit report will not affect your FICO Score. Hard inquiries such as actively applying for a new credit card or mortgage will affect your score (Credit Checks: What are credit inquiries and how do they affect your FICO® Score? par.2).
Where to Go for Free Copies of Credit Reports
For those who have credit cards, most people can check credit scores for free through their accounts at their crediting institutions.
Free Credit Reports
- Free Credit Scores | Credit Karma
- Credit Sesame | Free Financial Planning & Credit Score Analysis Tools
- Free Credit Score & Free Credit Report with No Credit Card |
- Mint (intuit.com)
- Free Credit Report – FreeCreditReport.com
- Check Your Free Credit Report & FICO® Score – Experian
- Experian Boost – Improve Your Credit Scores Instantly for Free
- Annual Credit Report.com – Home Page
Credit & Debt Resource Education Tools
- Credit Archives – Consumer Credit
- Secrets to Credit Score Success – Consumer Reports
- Credit and Debt | Consumer Advice (ftc.gov)
- NCLER Training Resource: Strategies for Responding to Debt Collectors
- Fraud Affects Every Community | Consumer Advice (ftc.gov)
- CFPB Financial Education Exchange (CFPB FinEx) | Consumer Financial Protection Bureau (consumerfinance.gov)
- FDIC: Money Smart for Older Adults
- Money Smart for Older Adults COVID-19 Scams and Planning Tips (gpo.gov)
- Credit and Debt Counseling – NFCC
- NFCC – National Foundation for Credit Counseling – Home
- Free Credit Counseling: Get Out of Debt Faster | Consolidated Credit
- Credit counseling agencies | Free non-profit credit counseling (needhelppayingbills.com)
STUDENT LOAN BORROWERS
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