4 common misconceptions about credit

You can get a "free" report from the government once per year.  Unfortunately, it does not tell you a credit score, only saying what credit lines are open, and where.  Essentially nothing I don't already know.  I have done it twice, but it's been a couple years.  Also, I have no idea what my credit score currently  is.  I pay in CASH for almost everything.  I have one CC with a $300 limit.

  I am essentially "poor" so, I suppose that makes a difference. I do not recieve any government assitance, nor do I ever intend to.   Other people generally have higher "standards of living" than I do, so I figure they must have tons of money.  LOL.  I did take out a car loan about 3 years ago, and they told me my score was 820 at that time.    I paid it off in a year, and am curious what my score is now, but I wouldn't pay $1 to find out.

   I do think there needs to be some government intervention into the credit scoring system, as it is important to most Americans.  Scores should be available to everyone, for free, not just bankers, and car salesman. 

My 2 cents, and I'm always willing to liten to others opinion on the matter.

So many silly, ill informed comments.  The credit reporting system is not perfect but it is not a scam to jack up interest rates.   The reality is that the federal government has made several strong moves in the last 3 years to fix the broken credit reporting system.  As a loan originator who works on commission, I have every reason to want to see every application I take get approved.  But there are times when common sense and good conscience cause me to tell people that based on their scores, they simply aren't ready to take on a financial commitment (aka...a home loan) worth hundreds of thousands of dollars. There are many cases in which low credit scores are the product of actual hardship such as a serious illness, long term layoff or unemployment, or a death of a wage earner.  But 7 out of 10 times when I see a low score it's due to a prolonged pattern of very bad money managment.   I can tell by looking at the number of defaults and late payments by people who have no hardship at all.  They are simply prone to living well beyond their means.  The rules of good credit management are easy to find and easy to follow.  Establish and follow a budget, live within your means, pay your bills on time, and try to keep your use of any particular credit account well below 50% of the spending limit.   If you have to sacrifice a trip to Hawaii or Mexico in order to pay off late bills, that's life.  Grow up and act like an adult and not a pleasure driven adolescent.   Imperfect as they may be, credit scores in and of themselves still serve as a fairly reliable barometer or predictor of how likely it is that a loan applicant will actually be a trustworthy borrower.  If the banks and government had paid more attention and denied low scoring applicants the oversized jumbo loans on which many of them are now defaulting, it would have compelled borrowers to purchase more affordable homes.  They would have had to live within their means.  The failure on the part of banks and Bush era regulators led to millions of homeowners taking out loans they could ultimately not afford.  The cost to the economy, the cost of government programs to try to stem the rate foreclosures could have been avoided had the government actually forced lenders to pay more attention to credit scores.  They are an imperfect but still useful tool that can be used to discern which borrowers are most likely to reliable and which are likely to be financially risky.  The goal isn't to prevent people who have made financial mistakes from buying homes, but rather to use the scores to define borrowing limits thereby causing people with bad financial skills to purchase more affordable houses so that they don't get into trouble.  You are allowed to pull one free credit report from each bureau per year.  A good idea is to stagger them so that you can get a fresh look at your report once every four months to be certain that their aren't glaring errors or even worse, entires that indicate identity theft.  Regulators in the WA state recommens pulling scores through annualcreditreports.​com because they won't try to sell you extra services.  The free report agencies are not government agencies but rather for-profit groups so it is they, not the government or the banks who are scamming you and trying to sell you extra services.  If you are being dinged on your score for over using credit cards or lines of credit, lower the balances by transfering parts of your high balances to cards with lower balances.  The general rule of thumb is keep the balance on any one card below 33%, and never exceed 50%.