Starting today, lenders and insurers will be required to disclose your credit score whenever they make an adverse decision on you, such as turning down your loan application or putting you into a higher interest rate loan.
The days of your credit score being treated like a matter of national security — something that had to be concealed from you by the financial industry — are over!
Lenders and insurers are mad about this development because a lack of info makes it easier for them to sneak through higher interest rates on you. Information is knowledge and power. Having your credit score is a powerful tool for you to be a better negotiator.
Your credit score is also a warning sign for you. If you’re handed an adverse decision from a lender or insurer, go to AnnualCreditReport.com and request the report from the credit bureau that was consulted in your case.
With your credit score and credit report in hand, you can then see if there’s an “oops” on your credit report that’s false, or if the “oops” is on you because you forgot to pay a bill or went delinquent on an account.
This kind of info helps you seize the day. It’s my belief that giving people this info instead of making it a giant mystery will help them to set goals to improve their credit standing.
Improving your credit score is really quite easy. There are only two truly essential things you have to know:
- Pay every bill on time every month. This alone accounts for 35% of your credit score.
- Don’t use too much of your available credit. Aim to use only 30% or less at a time. If you use more than 50% of your available credit, that demolishes your score. Credit utilization accounts for 30% of your credit score.
So together, these two factors above equate to 65% of your score. (The remaining 35% of stuff is not nearly as significant. Just concentrate on these two things I’ve mentioned above.)
Meanwhile, the news about credit is great these days. The Federal Reserve says delinquency is down 30% in the last two years, while the amount of debt relative to income is down. We are more careful today about what and when we borrow than we once were. If that sounds like you, just don’t fall back into old habits now that you’ve made the change!
