Your Credit Score Might Be Worse Than You Thought
Imagine you want to buy a house. You figure out what you can afford and check your credit score. It's great — an 800. You approach the bank and apply for a loan. But then the bank comes back and says, "Not so fast. With your low credit score we're not sure you should be buying anything right now."
You panic. What are they talking about? You checked your score. It looked fine. Did you do something wrong?
You get the chance to check your credit score for free once a year (although the law may be changing to allow people better access to their scores). When you check that score, you probably trust it's your true rating. But that's not always the case.
Understanding Your Credit Score
First, your credit scores are based on your credit report. That report can contain errors — including inaccurate balances, accounts that no longer exist, and even the wrong person's information.
Secondly, there's more than one credit score. The FICO and VantageScore systems both have different scales. FICO records your score from 300 to 850. The VantageScore records your score from 501 to 990.
So if your score is 650, is that a decent score under the FICO system or a bad score under the VantageScore system? This confusion has led the credit companies to change the VantageScore range to match the 300-850 range of FICO.
Lastly, lenders still sometimes see a different number on your score than you do. What looks great to you might only look OK to the lender, and that's not your fault — that's the fault of the credit companies.
Problems with your credit score, like the one described above at the bank, motivate a lot of people to buy credit monitoring programs. Those programs make serious money for the credit companies, so it's in their best interest to let the numbers change or have errors. You'll pay into their system more if the numbers are kept confusing.
So with all these errors being possible, with the credit companies seemingly against you even, what can you do to protect your score, or improve your credit score if it's low?
Our Kansas City bankruptcy firm can help!
Call us today at 816-842-6200 to speak with an attorney. Or you can email us and schedule your free consultation.
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