The beast named "Credit"

Once upon a time, there was a terrible monster named Credit.  He made his home in the town of Interest right in front of mouth of the river, which was the town's only source of water.  If people wanted to go and get fresh water for their family, they would have to go through Credit.  He denied people access to the water based on his historical experience with them.  If people brought him his favorite fruit, a prickly juicy fruit called, fico, he would allow them access, but people had to bring this fruit consistently.  If they sometimes offered him the fruit and other times not, he found them fickle and would now allow them access to the water.  His favorite townspeople were the ones that were reliable and he always rewarded these townspeople with access.  People who had access to the water lived happily ever after. The end.

The story of Credit the Beast is how I would explain to my future progeny how important credit is--but let's start at the beginning....The concept of credit was probably invented way back in the day of the caveman when a caveman would say to his hunter-gatherer friend, "I have faith in your berry picking abilities, but you do not have enough berries to buy my saber tooth tiger fur coat.  But--since you seem to be reliable, I will allow you to have my coat for now and you can pay me more berries later."

Saber tooth tiger..see the pretty coat!

Credit is quite the ingenious concept and without individuals, organizations, or governments extending credit to others, a lot of things wouldn't be possible in today's world.  Credit is how people afford to buy things like homes and cars without actually having all the money to pay for it all upfront.  In general, people who are reliable payers of their debts and pay consistently are the ones who have higher credit scores.  Fair Issac Corporation also known as FICO is the main credit scoring entity in our country, but it gets confusing because there are 3 large credit bureaus and you can have a different FICO score at each one because of their different formulas of calculating a score.  The  funny thing is that there's an idea of how FICO scores are calculated and what causes the score to increase or decrease, but no one knows the exact formula except for the scorers themselves.

So, I don't have the secret to your FICO score or your personal credit rating, but my tip of the day is to understand what makes up your credit.  The government now mandates that all consumers have access to an annual free credit report.  The free credit report does not provide you a FICO score, but does provide you a snapshot of all the credit items that have been sent to the credit bureau with your name on it.  It will list all your open credit cards, mortgages, car payments, and anything you were extended credit on for which the people chose to send to the credit bureaus.  If you see something wrong with your credit report, you can submit a request to the respective credit bureau to resolve the issue.  This can be a lengthy process so it's best to review your reports on a consistent basis.

The website to go to in order to review your credit report is: www.annualcreditreport.com
 You can get one free credit report from each of the 3 credit bureaus: Experian, TransUnion, Equifax.  The best technique to use is to not request all of them at once.  I stagger mine throughout the year so that I am able to see what's being reported at different times of the year.  I'll order my Experian report in April, the TransUnion one in September, and Equifax in December.  This way, I can get a snapshot of my credit throughout the year and assume that if there's one with a mistake, the other ones might and I can order them at that point.  If you really would like your actual score, that can be purchased also for a nominal fee.  However, some credit unions do provide you your score for free from one of the bureaus so if you are interested in credit monitoring, you can seek out that option.

That's all I have for this entry...but more to follow in the future!