Credit Issues and Advice
Questions/Tips

Debunking credit score myths

(05/21/2010) Parents aren't so bright when it comes to what behaviors will impact their credit scores and that could brush off on their kids.

In March, ING commissioned Harris Interactive to conduct an online survey of 1,042 parents of children age 17 years and younger.

• The survey discovered more than half, 56 percent, of those surveyed thought bouncing a check or paying a fee for having non-sufficient funds in their bank account would reduce their credit scores.

Wrong.

Credit reports typically don't include information about checking and debit accounts, nor non-sufficient fund issues unless they somehow impact an attached credit account.

• Also one in five (21 percent) thought checking their credit scores would hurt credit scores. Nearly as many (18 percent) thought accessing their credit report, would hurt their credit scores.

Wrong and wrong.

Obtaining your credit report and credit score has no bearing on your credit standing.

In fact, you should check your credit reports regularly. Every year, federal regulations allow you three free credit reports, one each from the three credit reporting agencies, Equifax, Experian and TransUnion.

If you visit some other sound-alike, come-on web site, and it isn't AnnualCreditReport.com, expect to pay for credit services you may not need in exchange for that so-called "free" report.

From AnnualCreditReport.com, get the three free reports all at once if you haven't seen them for years. Otherwise get one from a different company every four months to regularly monitor your credit report for errors, identity theft, black marks you may need to work on and other issues.

For your credit score it will cost you a nominal fee (it's worth it) paid to each of the three credit reporting agencies.

A credit score -- virtually always examined by lenders when you apply for a mortgage, credit card, car loan, other credit, even insurance and other financial accounts -- is a numerical rendition of your creditworthiness on your credit report.

Scores range from about 300 to about 850. The higher the number the more likely you are to get credit and the more likely you are to get cheap credit. Your score should be at 760 or above to land the best interest rate, according to FICO, a leading credit scoring system provider.

Debunking the myths

To help debunk credit score myths, misunderstandings, misdirections and to stop financial behaviors that could be passed onto future generations, ING Direct and Experian developed five tips to help parents separate fact from fiction.

• Practice what you preach. Simple financial behaviors such as paying your bills on time will keep your credit in good standing and will allow you to obtain better interest rates on big asset purchases like a house or car. Lead by example.

• Start early. When you kids start to ask you to buy things for them, it's time for the "money talk." Later, introduce more complex credit topics with stern statements like "credit is not free money." Talk about interest rates, paying on time, paying off balances and saving money.

Make learning fun with interactive web sites like Planet Orange; $avingsman's Choose To Save; Smart About Money; Credit When Credit Is Due; and Fool Proof Me.

• Make credit a family affair. Let children in on household financial discussions that reveal the true cost of necessities. Sit them at the table during budget and bill paying sessions. Explain the fallout from making poor financial decisions.

• Set family financial goals. Teach children how money doesn't grow on trees. Show them how to save for things they desire rather than accessing credit to spend money they do not have. It's a way to encourage your children to set financial goals and work towards achieving them. Children savor things more when they put in the time and effort to purchase items with their hard earned cash.

• Explain the difference. Talk to children about the differences between needs versus wants, especially at times when they want you to give into impulse buying. During grocery store visits, show kids the difference in prices between name brands and generic brands as a way to expand on this lesson.

 

Refinance at Today's Low Rates!

Other Related Articles:

'Free' credit reports aren't, except from AnnualCreditReport.com

Simple Ways to Help Your Credit Score

You and Your Credit; Make it a Happy Ongoing Relationship

Fannie Mae & Jumbo Mortgage Rates

Just One Click! = Current Rate Chart

Pennsylvania Mortgage Rates Current Mortgage Rates - Hawaii Current Mortgage Rates - Alaska West Virginia Mortgage Rates Virginia Mortgage Rates District of Columbia Mortgage Rates Maryland Mortgage Rates Delaware Mortgage Rates New Jersey Mortgage Rates Connecticut Mortgage Rates Rhode Island Mortgage Rates Massachusetts Mortgage Rates New Hampshire Mortgage Rates Vermont Mortgage Rates New Hampshire Mortgage Rates Maine Current Mortgage Rates Vermont Mortgage Rates Current Mortgage Rates - New York Current Mortgage Rates - Michigan Current Interest Rates - Wisconsin Current Mortgage Rates - MINNESOTA Ohio Mortgage Rates Current Mortgage Rates - Kentucky Current Mortgage Rates - Indiana Illinois - Current Mortgage Rates Current Mortgage Rates - Iowa Missouri Mortgage Rates Current Mortgage Rates - North Carolina South Carolina Mortgage Rates Current Mortgage Rates - Florida Current Mortgage Rates - Georgia Current Mortgage Rates - Tennessee Current Mortgage Rates - Alabama Current Mortgage Rates - Mississippi Current Mortgage Rates - Louisiana Current Mortgage Rates - Arkansas Current Mortgage Rates - Oklahoma Current Mortgage Rates - TEXAS Current Mortgage Rates - New Mexico Current Mortgage Rates - Arizona Current Mortgage Rates - Kansas Current Mortgage Rates - Nebraska Current Mortgage Rates - Colorado Current Mortgage Rates - Wyoming South Dakota Mortgage Rates Current Mortgage Rates - North Dakota Current Rates - Montana Idaho Current Rates Washington Mortgage Rates Current Mortgage Rates - Oregon Current Mortgage Rates - Utah Current Mortgage Rates - Nevada Current Mortgage Rates - California

Start by selecting your state


Get the Updated and Improved Mortgage Rates App from ERATE.com

iPad for Mortgage Rates