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Something else that's crucial to know is your credit score. It's the little three-digit number that represents how much of a risk you are for credit. The credit scoring service used by the overwhelming majority of lenders is FICO. Its scores range from 300 to 850 and as you might guess, the higher your score the better. Everyone from lenders to landlords look at your credit score as do an ever-growing percentage of employers. The National Foundation for Credit Counseling recently discovered that 60% of us haven't reviewed our credit scores within the previous year. This can be a really big mistake, especially if you're looking for a loan. The reason for this is that there is an inverse ratio at work here. The higher your credit score in the lower your interest rate will be. If your score is somewhere in the mid-700s you will save thousands of dollars in low interest rates. Conversely, if your score is below 620 and you apply for a loan it will be at a higher interest rate and less favorable terms or you might not even be able to get the loan at all.
Where can you get your credit score? The only place you can get your true FICO score is on its website www.myfico.com where you may have to pay for it. The three credit reporting bureaus will give you your credit score though it won't be your true FICO score. There are also sites like CreditKarma.com and CreditSesame.com where you can get your credit scores. While these won’t be your true FICO scores they should be close enough to give you a good idea as to how lenders will view you.
Your credit card statements
When one of your credit card statements arrives in the mail to you review it carefully or do you simply make a note of your balance and then file it away until it's time to make a payment? In this day and age of identity theft and data breaches its critical to review your credit card statements carefully every month. Look for transactions you don't remember having made or merchants you can't remember doing business with. Also look for small charges of one dollar or less. What identity thieves often do is make a very small charge to your account to see what happens. If you don't spot the charge and dispute that you could then be in for a world of trouble, as the thief will then hit your card hard. The same is true of any errors you find. Most credit card issuers restrict your liability in cases like this to $50 and may even waive that. But if you do find an error it’s important that you report it to the credit card issuer within 60 days or it's possible you could be stuck with the charge.