Emily Mahr
Helping Entrepreneurs focus more on their passions, less on paperwork.
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Life: Blog

My colorful journey through this life.

How I Feel about Credit Scores

This has bothered me for a while now, more like a few years.  I’m super passionate about Finance, so much so that I’ve been doing my own taxes for 18 years, have a college degree reflecting this passion, and help others toward achieving a financial footprint to match their goals.  My belief is that one year of personal finance needs to be required for high school graduation/GED.  I could literally keep going on this, but let’s get back to the original purpose of this post. 

Credit Scores 

... and the lack of information given as to why you don’t need to know that much about yours most of your life. 

Don’t get me wrong, credit scores are very important. To loan underwriters. 

What you need to be informed about is what a credit score is, and what it tells underwriters. 

A credit score is a statistical number that evaluates a consumer's creditworthiness and is based on credit history. Read more

A credit score plays a key role in a lender's decision to offer credit.

That is all. 

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This is why apps/companies such as Credit Karma drive me up the wall. They create false reasons for anxiety, for a profit. Yes, Credit Karma gives you a free credit score update, but it is not at all close to being correct.  One of my clients showed me their free Credit Karma score, and let me read the reasons as to why Credit Karma ‘gave’ them that score.  One of the reasons of the lower score (a lot lower than I felt they should have) was that they were an authorized user of two different credit cards.  An authorized user is NOT liable for any debt in which they are not the account holder, which means it can not be used against them for any reason.  I had this person request a real credit score, one from a financial institution, and it was over 100 points higher.  It was right where I felt their credit score should be. 

The 100 point difference not only caused anxiety, as this client thought they weren't going to be approved for a great interest rate on a home loan based on the Credit Karma score, it also created a rift between the two of us as they felt I wasn't achieving their goals I had been working so hard on for several years.

You don’t need to monitor your credit score daily.  You don’t even need to monitor it monthly, unless you’re waiting for a specific item on your credit report to be fixed.  More on that another day. 

What you do need to monitor 

Your credit report, every year.  This is what lists all of your debts, how well you pay them, your ability to pay them off, and if you’ve ever had a missed payment or anything else ‘bad’ that would lower your ability to get a great rate on a credit card or home loan.  If you see something on your credit report that is wrong, you file a dispute with each reporting agency (there are three), and go through the process of having it removed.

You can obtain your FREE annual report from: https://www.ftc.gov/faq/consumer-protection/get-my-free-credit-report

This is the Federal Trade Commission website, and they list the only place federally authorized to provide your free credit report.  You can request it online, and you will get a downloadable report, or by phone.  If you request it by phone, be in a secure area as you’re required to provide your social security number.

If you’re ever a victim of fraud, or a data breach, please review the FTC’s website on Identity Theft Services. https://www.consumer.ftc.gov/articles/0235-identity-theft-protection-services