The Financial Tech Podcast #2: How to Manage Your Credit Score and Win!

Financial TechAndrew Hunt and Jim Collison are together again in the next installment of the Financial Tech Podcast.  In this week’s Podcast we look exploding the myths that surround the credit score industry and what it mean to you to have a high or low credit score.  Can you have a 0 for a credit score?  What is a high score?  How is it figured out?  What affects your score?  How long does a late payment say on your report?  How do I find out what is on my report and what is the best way to get it?  Should I pay for it?  How do I improve my score?  How much should I carry as a balance on my credit card?  If I have bad credit, how do I improve it?

Andrew also talks about the best way to borrow money.  Who has the best rates?  What do I look for in a lender?  How do I get the best mortgage loan?  We cover these questions and much more.  It’s an information packed 30 minutes.  You won’t want to miss this!

How to access your Free Credit Report :http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm

The free Government sponsored site: http://annualcreditreport.com

www.equifax.com

www.experian.com

www.transunion.com

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Andrew’s Blog: http://gallupfcu.blogspot.com

Andrew’s Twitter: http://twitter.com/#!/Adhunt586

Jim’s Twitter: http://twitter.com/#!/jcollison

Contact the show at podcast@theaverageguy.tv

Saurabh says:

Jim / Andrew – Thank you for a GREAT podcast !! Very informative.

Couple thoughts:

(1) I believe one should also check and ensure that the information in their consumer report with Chexsystems is also correct.

Chexsystems isn’t one of the 3 credit bureaus but is used by financial institutions when you open a new checking / savings account. By law everyone can obtain free Chexsystems consumer report every 12 months.

(2) Another way to get a copy of your free credit report without going through annualcreditreport or applying for new credit (and requesting a copy of the report used in the process) is when you request a quote for an automobile insurance and the insurance company does not provide you their BEST POSSIBLE QUOTE.

Although one should always ensure their automobile insurance meets their needs and is offered at a competitive rate, especially when the policy renews; this offers yet another opportunity for some to get their credit report for free, without a hard inquiry (insurance company checks are soft inquiries, are not visible to anyone but self and therefore do not ding the credit score like hard inquiries do).

(3) If one is applying for a new credit card, hoping that it will help their credit history, they should be careful to apply ONLY for cards that report the credit lines to the 3 credit bureaus.

Card companies are increasingly converting their “regular” cards to what are called as NPSL – Non Preset Spending Credit Limit (Visa Signature cards for example) / Global (e.g. World Mastercard) for customers with good+ credit history.

The issuing banks do NOT report the approved credit lines for these NPSL / Global cards to the 3 credit bureaus and therefore these cards don’t “really” help as these do not add to your available credit (on your report). This inturn does NOT reduce your credit utilization ratio – which as Andrew mentioned should be as low as possible – preferably below 33%).

In fact, even a small charge of $100 will show a $10,000 NPSL card as having maxed out (to automated underwriting systems) because the available credit on the report for this account will listed as $0.

On the other hand, if one is stuck with a NPSL / World Mastercard (which are nice to have for the associated perks), they should indeed max out that card to the available “credit limit” (or close to that) FOR ONCE and pay that amount off immediately (before incurring any interest charges) because in the absence of an available credit limit, the automated systems use the “High Balance”, as the credit line for that account when calculating the “credit utilization ratio”.

(4) Although one is entitled to get a free personal credit report from each of the 3 credit bureaus each year, credit scores are not free. There is one institution that I know of, which provides this free : Chase provides a free monthly FICO credit score (through Experian) for customers who have a Chase personal checking account + Chase credit card.

-Saurabh