Around one-third of all marriage proposals are made between Thanksgiving and New Year’s Day, according to several wedding surveys. But guess who’s statistically likely to be left on one knee without a “yes,” or left out of the action entirely? People with bad credit. Half of couples in an Experian survey last year said credit scores were an important factor when choosing a spouse. The survey also found that “financial responsibility” was a more important quality than “physical attractiveness.”
If that’s not incentive enough to make a credit-related resolution this holiday season, consider these additional fun facts about credit scores that have the potential to save you a lot of money and grief. Consider it a gift for your wallet.
1. It’s credit scores — plural. You might think that you have a single credit score, but that is far from the truth. There actually are hundreds — more than 1,000, in fact — credit scores in existence. They’re offered by a number of different companies that use proprietary analytical methods to evaluate your financial history and, in turn, provide an indication of risk to a prospective lender. They often use different score ranges or categories too.
This just goes to show that you should not get too hung up on your exact number. There’s no guarantee that a lender will use the same type of credit score that you accessed, and even if it is the same scoring model, most lenders make their own in-house modifications anyway. Your credit score should therefore be used mostly as a way to track credit building progress or to estimate your approvability for credit.
2. Your credit reports are more important than your credit score. Credit reports from the credit bureaus Equifax, Experian and TransUnion are the foundation for all credit scores. That means credit scores are only as good as the information on your credit reports, which might be a bit unnerving when you consider that 1 in 5 people have a mistake on one of their reports, according to the Federal Trade Commission. That’s one reason it’s so important to take full advantage of your right to a free copy of each report once every 12 months through AnnualCreditReport.com.
3. Credit standing plays a role in employment, apartment rentals and insurance premiums. While employers, landlords and insurance companies can’t get your three-digit credit score, they can request (and often require) that you submit to a credit check. This enables them to review one of your credit reports and means that a checkered history with money management could result in limited employment or housing options as well as higher-than-necessary monthly costs. For example, drivers who have excellent credit pay about 50 percent less for car insurance each month, on average, than drivers with no established credit history, according to a WalletHub study this year.
4. Credit scores won’t warn you about ID theft fast enough. With money and identity theft among consumers’ biggest concerns, the availability of free credit scores has been touted as a means to alert consumers of compromised personal information. President Barack Obama has even provided praise.
“I’m pleased that more banks, credit card issuers and lenders are stepping up and equipping Americans with another weapon against identity theft, and that’s access to their credit scores, free of charge,” Obama said during a January speech at the FTC.
However, there are a couple of problems with this idea. First, credit scores can change for way too many reasons for consumers to be able to dependably decipher a drop in their score due to fraud. Secondly, fraud moves fast, and credit scores work on a delay. So even if you do notice a suspicious change in your credit score, it will likely be weeks or even months after the first warning signs appear on your credit report or in your mailbox.
Hopefully, this information provides some food for thought over the holidays, as billions of dollars in purchases and millions of resolutions are made.
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4 Surprising Facts About Your Credit Score originally appeared on usnews.com
