My Thoughts On Credit Scores

I’ve been thinking about credit scores today.   Don’t know why this got stuck in my head, but it did.   Starting in about 2004 (at the height of our debt) I began reading just about every personal finance book we have in our library.   I couldn’t get enough.   On many subjects, most of the authors would have relatively similar viewpoints.   There are some areas, like paying off your mortgage early, where authors disagree wildly, and then there’s the FICO score.   Most books mentioned it a time or two (or 50,  inthe Suze Orman books).   But it seemed that just about every author had different ideas about what actually  goes into a credit score.   I saw some authors who were categorically firm about not having too much available credit, while others discussed the benefits of having low debt and high credit limits.   Some books assigned more value to paying bills on time, others gave higher value to the debt/credit ratio – it seemed that every book had a slightly different “formula” for how the credit score is calculated.

This is not like the mortgage debate, where each side has a point.   If the FICO score is calculated with a formula, it’s basic math.   There cannot be two disparate answers.   So why all the cloak and dagger stuff?   Why is this not just basic public knowledge, explained in plain english in every credit card disclosure form, car loan, or mortgage paperwork?  

Why does it take months to get incorrect information removed from credit reports?    We did have  some very minor incorrect info in a report that I got someone to fix very quickly (I had a new, correct report within two weeks).   But the time that someone used my husband’s credit card number at a store in California and rang up $1500 in charges, it took  him almost a year to get it resolved on his credit report.  

If a credit score can impact everything from  auto insurance prices to whether you get hired for a job, why do we have to pay to see what our score is?   I know that my husband and I both had great scores when we bought our house in 2003, and since then we have not – as far as I know – done anything that would cause our scores to go down.   We get our credit reports – for free – about every 6 months, but neither of us has seen an actual credit score in almost 5 years.

It seems that credit scores should be  easy to access, like a bank account balance, and easy to understand.   That is, unless the credit industry doesn’t really want people to understand them.   Hmmm – I guess they do get to charge higher interest to people with lower credit scores….