Credit Reports and Skinny Mirrors
Chad is having a hard time. The rest of the team has encouraged him to “go talk to someone,” but he just won’t listen.
Here’s the thing…Chad thinks he’s still the Boss of me. But he’s not, see? He’s the ole Boss and I am free to sass and take charge and turn down orders now. His most recent mishap occurred last week when he sent me three super boring articles on credit reports and told me there was some good info there if I wanted to write about it.
Let’s get something straight…unless Glamour Magazine is covering credit reports, I ain’t reading about them. Instead, I pulled Chad in for an interview.
You’re Not My Boss: Credit Reporting and Skinny Mirrors
An Interview with the ole Boss, Chad Helmcamp
Just the Assistant: First thing’s first…where is my coffee?
Ole Boss Chad: Um, well ah…
JA: Oh nevermind. Listen, I overheard a conversation in the office last week in which a client was wondering why the credit we pulled for them gave us a different score than the score they had from the free places. What gives?
Ole Boss: There are different types of credit reports: Consumer Reports, the most common being the Vantage Score; and FICO scores, which are what we pull. And those different types of credit reports have different ranges of scores. They use different scales.
JA: What’s the difference?
Ole Boss: Honestly, I think the consumer sites like to make people feel a bit better about themselves.
JA: Like a skinny mirror? My best friend has a skinny mirror and I love checking myself out in it when I come over.
Ole Boss: Exactly like a skinny mirror. They have a larger scale so even if you have very average credit, the number is higher than the number you’d get from FICO.
JA: So should people even check those free scores?
Ole Boss: Absolutely. I encourage people to check every four months, since you get a free report from each of the three agencies per year. I’d check each one once a year, spread out over the year.
The main thing to look at on those reports is where you rank compared to the average American. That lets you know if you have average or good credit. Also, you need to look at the actual report to see if some crazy assistant might have stolen your identity and racked up a huge Anthropologie bill or something.
JA: What’s your credit like?
Ole Boss: Off the charts. Ha ha. I don’t know…I haven’t checked in a long time.
[Note: At this point Chad got quite dodgy with me. Hmmm…]
Ole Boss: Uh, what’s the next question?
JA: What do people really need to know about credit scores?
Ole Boss: Pay your bills. Paying your bills on time makes up 35% of your credit score. And, don’t max out your credit card. 30% of your credit score comes from the amount of debt you have compared to the amount of credit available to you.
[Note: Chad rambled on quite a while here..you might want to take a break and get a snack before reading on.]
JA: Oh yeah? That’s fascinating…
Ole Boss: Also, it’s not always a good idea to close out a credit card once you pay it off, because 15% of your score is based on the length of your credit history. It can help you to leave the card open.
JA: Assuming you’re not a nutcase with a thousand open cards right?
Ole Boss: Right. Also, your score depends on how often you apply for new credit.
JA: Ah yes, Ole Boss Chad. That reminds me of a recent client who was a bit nervous about having his credit pulled, thinking it would drop his score.
Ole Boss: If you are applying for new credit all the time, then yes, having even more credit pulled hurts your score. But if you apply for credit just a few times a year, then having credit pulled for a mortgage should not have a big negative impact on your scores. Either way, you have to have credit pulled in order to obtain a mortgage.
JA: Huh!? Oh, hey, anything else you want to tell people?
Ole Boss Chad: Yes! Tell people they can come talk to me and we will discuss all their questions.
Just the Assistant: Sounds great (ole) Boss. Now go answer all those phone calls!