Credit Scores


There are several things that can hurt your credit score. Unpaid collection accounts, past due accounts, and short credit history are some of the few. But there are some things that people think will damage their credit score, but won’t. Here are three total myths people erroneously think will damage their credit score:

  • Checking their credit report – Checking your credit report is a responsible thing to do and should be done often. It does not count against your credit points.
  • Being denied credit – If you’re denied credit, you will not have points taken off your score either.
  • Interest rate on the loans - The amount of money you pay in interest does not hurt your credit score. However, if your interest rates are so high to where you can’t handle the payments that will hurt your credit score.

As long as you’re responsible and on time with your payments, you have no reason to worry about your credit score taking a hit for the reasons mentioned above.



Ever wonder how your credit score is calculated? Although many companies are can gather your credit history and produce your credit score, there one major kind of credit score most lenders refer and that’s your FICO score. FICO scores range anywhere between 300 – which is really poor and 850 – which is really great. FICO doesn’t state what is considered a good or bad score. It only provides the score.

FICO scores are created and judged by the following:

  • Your payment history. This makes up 35% of your score.
  • The amount you owe. This makes up 30% of your score.
  • Length of credit history. This is about 15% of your score.
  • New credit: This makes up about 10% of your score.
  • Mixture of credit types: This is 10% of your credit score.


Ever wonder how your credit score is calculated? Although many companies are can gather your credit history and produce your credit score, there one major kind of credit score most lenders refer and that’s your FICO score. FICO scores range anywhere between 300 – which is really poor and 850 – which is really great. FICO doesn’t state what is considered a good or bad score. It only provides the score.

FICO scores are created and judged by the following:

  • Your payment history. This makes up 35% of your score.
  • The amount you owe. This makes up 30% of your score.
  • Length of credit history. This is about 15% of your score.
  • New credit: This makes up about 10% of your score.
  • Mixture of credit types: This is 10% of your credit score.


Though they may be too young to have a credit score, parents should be proactive about checking their child’s credit report. Kids can easily become victims of identity theft and if not monitored, the scam against them can go on for years before anyone ever notices it.

One red flag to look out for would come in your mailbox. If your child gets pre-approved credit offers coming in their name, this may be a sign that someone is using their credit.

Keep track of their credit report by monitoring it through the three major credit reporting agencies. Call them up and ask to check if your child has a credit report. If your child doesn’t that’s good and you shouldn’t have to worry. Don’t do it just once. Keep track of it every year or so.

In some states, you can freeze your child’s credit report, but it can be a little complicated since you have to have a report in order to freeze it. Be careful with this option as well because you’ll be given a special number that would be used to unlock the freeze. If you lose it, it could delay the process of removing the freeze. For more information on how to protect your child’s credit, read here.



Building good credit when you’re just starting out doesn’t have to be a worry. All you need is a little patience along with some good strategies and before you know it, your credit history will be strong. So far in parts one and two, we covered the advantages of getting a cosigner, becoming an authorized user, diversifying debt and going to your local bank. Now, here are a couple of more strategies that’ll help you build up your credit history for the first time.

#1 – Department Store Card:  Another great option for building credit is getting a store credit card. The interest rates may be much higher, but the approval process isn’t as difficult. Just make sure you pay that debt on time every month. If you fall behind, that will ruin your credit history before it ever starts.

#2 – Ask Other Account Holders to Report You: If you have recurring monthly expenses such as rent and utilities, ask the provider to report your account activity to the credit bureaus.  This strategy is rarely used, but it will work.  Just be sure your accounts are all in good standing before asking them to report you.

Now that you have some solid strategies on how to build your credit history from scratch, don’t let anything stand in your way. If you implement these starting now, you will see positive results on your report in a year or less.



In part one of “How to Build Credit When You’re Just Starting Out”, you could see how getting a cosigner or becoming an authorized user will help you to establish favorable credit history.  In part two, you’ll see how techniques such as diversifying debt will help to really improve your credit report.

#1 – Diversify Debt:  Don’t just rely on credit cards to establish your credit history.  You will want to diversify the kind of debt you’re carrying with other kinds of loans such as car loans and even personal loans. This gives lenders a well-rounded look into your level of responsibility.  

#2 – Try Your Bank First:  When in doubt, try your personal bank for a loan. This is a good option for those who are just starting out because banks will usually offer secure and unsecured loans to customers in good standing.  

Implementing these two strategies will help you to establish credit for the first time. They are also much more aggressive for increasing your score. Check out part three for some final strategies on how to build good credit when you’re just starting out.



If you’re new to the world of credit, then you probably know it isn’t easy to establish good credit. Getting lenders to trust you can be a challenge as they want proof that you’re trustworthy. It’s really a catch-22 because how can you prove that you’re trustworthy if you’ve never had a chance to show it.

In part 1 of “How to Build Credit When You’re Just Starting Out”, you’ll see really great strategies for pulling points in your favor.

#1 – Become an Authorized User:  If you can piggyback off of someone else with good credit, then do it. Becoming an authorized user means you will ask a friend or family member with good credit to allow you to become an authorized user on their credit card. Tell them that you don’t want a card of your own. You only want your name on the account. Depending on the company this might help add some history to your report.   

#2 – Get a Co-Signer: A co-signer is someone who agrees to go on a loan with you in order help you get approved. You will have to be responsible with this because if you default on payments, they become responsible. That’s the opposite of what you want to do.

#3 – Get a Secured Card:  Many lenders offer consumers credit cards in exchange for a deposit. So, this is another great option for when you’re just starting out.  

These three tips will help to add favorable history to your credit report. Check out part two for more credit history building strategies.



Who knew that getting hired for a new position could all come down to your credit history? It’s true. In several states, it’s perfectly legal for employers to pull your credit history during the hiring process. In their opinion, it determines your level of trustworthiness for the position they’d possibly be hiring you for.

Although legal, this isn’t something the majority of employers actually do. According to a 2012 survey from the Society of Human Resource Management, only 13% of respondents said they check all employee’s credit history while 53% say they don’t do it at all.

It’s still better to be safe than sorry, which is why there are proactive steps you can take just in case a hiring manager does decide to consider your credit history. You can be proactive by:

  • Checking your credit history for inaccuracies
  • Cleaning up where you can
  • Having an explanation ready for derogatory marks


In the US, many employers have the right to look over your credit report before hiring you. Some say it’s justified for “trust” purposes. Others say it’s unfair to minorities or to those who are low income. The good news is there are some states where employers are prohibited from using your credit score against you. These states include:

  • Delaware
  • Connecticut
  • Colorado
  • California
  • Hawaii
  • Maryland
  • Illinois
  • Vermont
  • Washington
  • Oregon
  • Nevada

Although the state of New York hasn’t banned this practice, the city of New York has, which is a relief for many job seekers. Keep in mind that there are still some professions where it’s still legal to check your credit report such as some government positions.



It’s important to know that there are different places to pull your credit score from. It’s up to the lender which one they use, but the one most largely used is the FICO score. Keep note that different places offer credit scores. This is important when you’re pulling your credit score either from a paid or free agency. The most common places a score can be pulled from include:

  • FICO: This was mentioned earlier and is the most popular scoring model. It ranges from 300 to 850 and gathers its information from the large credit reporting agencies: Equifax, Experian and TransUnion.
  • VantageScore: This scoring model is the second most popular after FICO score.
  • PLUS score: This scoring model is based only on your Experian credit report. Most lenders don’t use it.
  • TransRisk score: Just like PLUS score was developed by Experian, TransRisk was developed by TransUnion.
  • Equifax score: As the name suggests, this scoring model is based on your Equifax score.