A Credit Score Primer

Checking your credit report may seem about as exciting as flossing your teeth, but it’s important to your financial health. Syndicated personal finance writer Gregory Karp devoted three recent columns to the topic, reminding us of some of the basics and adding some helpful tips. The basics include making sure to order your free credit reports through AnnualCreditReport.com. You are entitled to one free report per year from each of the three main bureaus. A helpful tip is to stagger your requests, one every four months, giving you something of a free credit monitoring service. Examine each report for errors (such as a wrong address). If you find one, follow the online instructions to file a dispute.

In order to obtain your credit score you’ll have to buy it. If you’re in the market for a mortgage, you may want to order scores from all three bureaus. Doing so through Fair Isaac Corporation (FICO), creator of the credit score, will set you back a little under $50. Just curious to know your number? Karp suggests ordering a single FICO score through Equifax for $7.95. You can buy it while ordering your credit report through AnnualCreditReport.com. As for keeping your score healthy (750 or above is preferable), pay all bills on time, use less than 30 percent of your available credit (less than 10 percent is better), and don’t close old accounts even if you don’t use them.

When checking your credit reports you should also look for any signs of identity theft, such as an open credit line that you did not authorize. If you spot any suspicious activity, follow from the Federal Trade Commission.

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