Understanding Your Credit Score

In a rough and tumble economy, more people are getting bogged down by credit card companies with late or no payments. But how does that affect your credit score, and what does that score mean? A lot of people don’t really know how the credit score works; there are a lot of misconceptions out there.

The following account is why you should monitor your credit score and watch it like a hawk! When the economy eventually turns around your good credit will make all the difference in the world when you are able to make the purchases you want.

“There’s three scores and whenever a lender is looking at your credit score they chose the middle line,” Michelle Symthe says. Michelle Smythe knows little about credit scores.  She’s done her research because she’s trying to buy a house. “It’s pretty interesting how you can have great credit and zooming along and one thing happens and boom–it tumbles like 50 points,” Smythe says.

In hard economic times, many credit card holders are tumbling all over the place. “We’re seeing a lot more credit card problems and a lot more credit card issues,” Credit Counselor Jill Perry says.Perry sees numerous people.  She says landlords or home mortgage lenders look at your score. The score number is a simple version of your complex financial history.  The credit scale ranges from 300 to 850.

“When you think back–who taught you how to manage credit? We don’t teach it in high school and don’t teach it in college. We just throw you out there and expect you to know one of the most important things in the world,” Perry says. There are many myths surrounding credit scores. First, checking your credit score doesn’t make your score go up or down.

Age, income and sex will go on your credit report, but not influence your score. And a higher salary doesn’t necessarily mean a good credit score. Lastly, newlyweds don’t have merging scores. They can have a joint credit report, but separate scores. “Usually when you’re looking at credit scores, the lower the number the worse your credit,” Perry adds. Call the credit score a “scarlet letter” of the financial world, but a low score can scar you from the time being. “Believe it or not, you can repair a score 400 to a 600 in a year or less if you do the right thing,” Perry says. The right thing is taking action.