How to Check and Change Your Credit Score
0:00:07.0 Lynne Jarman-Johnson: Money, I’m Home. Welcome in. I’m Lynne Jarman-Johnson with Consumers Credit Union. From finance to fitness, we have it all, and I’ll tell you what, we have something new that is very exciting for members, and that is an opportunity for you to constantly be aware of what your credit score is. And the person who knows the most about making sure that your credit score is where you want it to be and need it to be is Scott Dobson. He’s our @Work manager here at Consumers Credit Union. Scott, thanks so much for joining us today.
0:00:39.1 Scott Dobson: Well, hi, Lynne, thanks for having me. Always a pleasure.
0:00:41.6 LJJ: Well, I’ll tell you what, I was so excited when I found out that we were going to be able to input credit score into Online Banking for every one of our members, because I do think it’s a score that people might be a little reticent or afraid of, but they don’t need to be, right?
0:01:00.1 SD: They don’t need to be, and I’m excited, too. We have new products come on sometime, and I say, I’m excited, but this one I really am, because one of the main things in being financially fit is being in control of your finances, and this tool will really make it easy for us to see where we are and take control of our financial futures.
0:01:17.6 LJJ: So I was just reading a JD Power study that stated that well over 50%, I think it’s closer to 60% of individuals in the United States, are teetering on the edge when it comes to financial security and safety and savings with their money. And one of the reasons that they talked about, obviously was because of the pandemic, but it was also just about education and learning the steps to take to make themselves financially secure, and one of those things is to learn about credit scores. But what’s interesting to me is when I talk with people, you can see their eyes kind of pause, like, “I don’t really want to talk about this.” Why is that, Scott?
0:02:01.8 SD: I like the control thing that you… You’re not… You don’t feel like you’re in control of your credit score. It’s out there. Other companies and banks kind of decide what your score is going to be, and there is a lot of trepidation, no matter what. I’ll tell you a quick little story. I just got a new cellphone on Cyber Monday, ’cause they had a great deal. They pull your credit, of course, to get you your cellphone plan, and even though I had checked my credit score maybe 45 days ago and knew what it was, I was still a little nervous just to get a “yes” or “no” on a simple cellphone. So, it does really matter and it does freak us out a little bit, which is why I like this and being able to see it all the time. It really helps settle us all down, I think.
0:02:46.5 LJJ: So anyone who is a member with us can sign up. It’s complementary. There’s no cost to be able to embed your credit score into your Online Banking, Scott, let’s talk about what that credit score means. Start with the numbers, and where should we feel comfortable? Where should we say, “Okay, what can I do?”
0:03:07.9 SD: Credit scores are a number that’s derived by three different credit reporting agencies, and each of them collects their own information on your credit history and does some super-secret math and comes up with a score. What Consumers does with this online credit score is it uses a combination of the math that all three use and gives you kind of a representative score. It gives you a good idea of where you’re at right now, and being able to see that, where you are now simply and to see where you’re going to be able to go will really help you decide your own financial fate.
0:03:44.4 LJJ: Where’s the bottom of the score, and where is the top?
0:03:48.7 SD: Excellent questions. They say the bottom score is 350. I’ve never personally seen the score down in the 300s. But the lowest it could be is 350. That would be mean you’ve had some credit issues—any credit that you’ve had has not worked out for you—all the way up to 850, which would be a perfect credit for an entire lifetime. And it goes anywhere in between there. In general, if your credit score is in the 500s or below, that would be poor; the 6s and most 7s are medium to good credit, and higher 7s, they would be excellent credit.
0:04:22.1 LJJ: So, Scott, how do those numbers work in everyday life. Let’s pretend I’m going to buy a car, and my score is in the low 600s or upper 500s comparatively to the 700. Does that make a difference on what I pay?
0:04:37.0 SD: Yeah, from a lender’s perspective, from our perspective, we look at the score as a risk factor. So, the lower that your score is, the higher the probability or the higher the chance that you won’t be able to make your payments on time on that loan. So, if you have a lower score, it makes your interest rate probably higher, because you’re a little bit riskier of a lender. So, if you have a very high score, your lender looks at that and says, “Oh, this is the kind of person that always pays back every month, no matter what. Absolutely, we’re giving them a loan at our very best rate.” If you don’t have a credit score or if you have had some… On your credit, it could be more difficult. There could be more restrictions. You may not be able to borrow as much money, and you will probably have to pay a higher interest rate on that money to be able to get it.
0:05:28.9 LJJ: So, this truly is as simple as learning what your number is, but then also learning the steps that you can take to improve the number, if that is your focus. Tell us what are those three things, or four things that are the hottest reasons why your score can lower.
0:05:51.4 SD: The number one thing, if you’re looking at your score and you go on the 16th, and you log in, like “Oh my score is… ” Whatever it is and you’re like, “I do not want my score to go down.” What you do not want to do is pay a bill late. Paying bills late shows up on your credit report. So, if you paid your October mortgage payment late in November of this year it would say, “Hey, this person made a late payment.” And that will really lower your credit score. So making on-time payments is the number one most important thing that you can do. Secondly is try not to carry a lot of debt. If you have credit cards, try to keep a low balance on them. That helps you in two ways: You don’t have to pay interest on it, and it helps your credit score. And finally, your length of credit history is really important—how long you’ve had credit history. So one of the coolest things is once you can log into this, on the 16th, you can look at all of your trade lines and see which credit card is the oldest one, and you’ll really want to make sure that you keep the card open. So if you have a credit card that you’ve had for 7, 8, 10 years, that length of history really helps bump up your credit score.
0:07:02.5 LJJ: What are things, Scott, that we might not even think about? You mentioned cellphone earlier. Are there items that, medical bills as an example, especially with what’s going on right now. If you can’t pay those bills, how important is it to connect with the provider to make sure that there’s a conversation started?
0:07:25.6 SD: Yeah, that’s the number one thing to do, especially for an unexpected bill like a medical bill or just say you’re in a position right now where you have a bill due and you cannot pay it. You do not have the money in the bank. The number one thing that we suggest is to contact your creditor and let them know, and be honest with them and say, “Here’s my situation. I want to pay you. My bill’s due Friday, and I can’t do it Friday.” Oftentimes, especially with medical bills, hospitals and doctor’s offices, they know that you didn’t plan on spending a couple hundred dollars or 1,000 for whatever. They’ll absolutely make arrangements with you. They can take a small payment on your pay day, come up with a plan that will keep them from reporting negatively to your credit report, and come up with a plan that works for your budget.
0:08:13.0 LJJ: Love that concept, Scott. When we launch this, how simple is it? Is it pretty much a click of a button and, wow, we can see our credit score? We have to sign up, obviously, once we’re in Online Banking.
0:08:25.8 SD: Yeah. If you’re a member though and you get into Online Banking, pretty darn easy. There’s going to be a new… We call it a widget, a new little thing on the dashboard. It’s going to pop up and say, “Hey, do you want to get your credit score?” And you push the button and say, continue. And that is all of it. Your credit score will automatically… The score will automatically change every month. We’ll go out and take a look at your score and put it on your dashboard for you. Every time you log into Online Banking—this is my favorite part—you can go to that widget and click it and see if your credit score changed. Which is awesome because if you, like myself, I got a new cellphone. Verizon checked my credit. Now I get to go back and look at my score again and see what that did. A new inquiry generally will lower your credit score. Now I’m going to get to see what it did to my credit score.
0:09:13.8 SD: Making payments on time. If you got Bill Pay set up, you’re like, “Man, I’m making my mortgage payment on time.” And you watch every month as those mortgage payments get made on time, and you update your score and see your score go up. To me, that’s really awesome, real world cause and effect where you could say, “I’m going to do this and then I’m going to be able to log in to Online Banking and see the positive result from that.” So that’s very exciting and really, to me, makes it feel like you are in control of your finances, and you can control your credit score maybe more than you thought you did before we had this.
0:09:43.6 LJJ: Well, I’ll tell you what, Scott, I love the fact that every time I talk with you I get new technical words like “super-duper”. [laughter] Seriously, thank you so much for bringing information to us in a way that we can all understand and very excited about making sure that all members can check their credit score when they want to but also then take control of their money. Scott, thanks so much.
0:10:07.3 SD: You bet. Have a super-duper day.
0:10:11.4 LJJ: I sure will. Money, I’m Home. Thank you for joining us. If you have any topics you’d like us to cover, please send them my way. We’d love a super-duper conversation. [laughter] And thank you Jake Esselink for your production skills. Everyone have a wonderful safe week.