Lunch and Learn: My Credit What?
This is meant to be a brief discussion on a very important three digit number which when mastered will open so many doors but when ignored will make your financial life more difficult than it needs to be. It is important to have a disclaimer that I am not a financial professional and to please follow up with your own research. This is not meant to be financial advice but an open discussion regarding your FICO score.
At its most basic definition, your credit score is a numerical representation (ranging from 300 – 850) which shows what your creditworthiness is. The information from which this score is derived from is your credit reports from the credit bureaus. What these companies do is “Collect information about where you live and work, how you pay your bills, whether or not you have been sued, arrested, or filed for bankruptcy.” (usa.gov/credit-reports). The three companies are Equifax, Experian and Transunion. The numeric representation of your credit history and the way that it is weighted is as follows: Payment history: 35%, Amounts owed: 30%, Length of credit history: 15%, How many types of credit in use: 10%, Account inquiries: 10%.
Now that you know what your FICO score is and where the information is derived from let’s talk about something that is applicable right now!
The first question to be answered is, what is my credit score? First things first is to get your credit report directly from the credit bureaus once a year for free. (Annualcreditreport.com) This is crucial not only to monitor your FICO score but also what is actually seen on your credit report in case something comes up that is incorrect or fraudulent in nature. A second popular way that recently has emerged is for your credit card company to show you what your credit score is along with your monthly statement.
As a dental student, the financial resources at our disposal are less now than what they will hopefully be in a couple years. With that being said, one definite step that can be taken today and for the next couple years in order to put you in a better position for the future is understanding your credit score, what it is derived from, and what you can do right now to maintain it and develop it appropriately.