Also in this playlist...
This transcript is automatically generated
You know the difference between a credit report and a credit score well if you're like most consumers out there you probably don't but thanks to the recently passed card -- New rules are in place in the movement is a flight to help clear up the confusion.
Here now with details as John -- he's president of consumer education for credit dot com John great to -- -- likewise.
Just ask you first up I think a lot of people don't understand the difference between a report -- the score give us the quick 101 on that.
And then tell us what this new law might do sure absolutely won't credit report is simply a collection -- your financial obligations.
Third party collections.
And some public records a credit score is the distillation of that information -- -- -- number it's a three digit one number -- achieved by lenders to determine the likelihood that you defaulting -- paying passed in the next 24 months and that number really rules your life if you're a consumer that number of means everything that's how much you pay your mortgage.
If that turns on your credit card it's everything insurance it it it does royal life it's actually a it almost as important it's it's almost like your creditworthiness DNA if you well I love that OK -- also tell me how real is it.
That we might actually get that score for free because right now the only source I know for a cost.
You might want to get that multiple times are obsolete -- Jerry there's more momentum now in the free credit score war.
Then there has been since 2002 when we were debating how we were gonna do with the disclosure of free credit reports and so I think.
We will eventually see it but what happened and determined to get is.
Ironing out the details who's gonna disclose that.
How often are we gonna get it annually what's the context and that's gonna happen and John what about that fixing our critter make your credit score better we have to go through the credit report and can -- some of the items within that I think that's a very very good point your credit score is completely based on information your credit report so fixing -- score is not so much as important as fixing a date on the -- -- you've got information.
It's not that doesn't speak glowingly -- you lot of credit card debt lot of delinquencies that's really where you have to focus your attention to -- this kind of follows the changes in your credit reports.
Anything less than 700 today is -- really make it difficult for you -- Find things at competitive rates and terms but these these reports always have mistakes -- them and they raided in error is.
So why isn't there a penalty for the companies out there I mean they're not even paying for this information in a perfect world I would get paid for the information about me.
But that doesn't happen it's a very breaking business model cost of goods on your data is really zero and then they turn around solid back to the lenders who have given it to them for free.
-- right -- -- reports -- contain errors no one disputes that.
The difference is is is the error major enough to cause the -- or insurance company to make it different decision about you had they had seen your credit report that 100% accurate.
And really the error rate from that perspective is not nearly as high as the -- -- for the -- and things that -- secret like my employment of current -- cost -- job market possibly -- -- on my credits moral and -- what's the real let me say 700 is important not hearing -- 73740.
Yet alone it's it's lender by lender and its product by product if you really -- to put yourself -- to be safe harbor position.
You really need to have -- 0750 across the board and you're really almost an elite credit crunch and unique position wow OK so.
-- living trends in the industry they're rolling out -- scores all the time so -- course for lenders scores for insurance companies.
To consumers really need to pay attention to this or is this really something for the industry at it like it for a consumer to try to pay attention to every single -- war.
It's being sold into the insurance market into the landing market it's just not realistic in its if it isn't gonna happen.
But work still basing all of these scores on one thing.
Your credit report and it's definitely easier to manage your credit report -- it -- to chase around to dozens scores that -- never even heard it yet and and they're different credit agencies and I united so so one -- -- etc.
and hurting him right will they all -- of the same number they won't -- they won't come up with the same number and the reason -- -- -- because even though there are three major credit reporting agencies the data that -- -- on -- mean everyone else watching.
-- not 100% redundant which is -- your scores are going to be slightly different.
And slightly different to the point that it really matters.
What scores being pulled when you're looking for that mortgage obsolete and you wanna have your best foot forward so if you -- shop should immediately with lenders to use the credit report it's gonna -- the strongest credit score on you.
You're like more likely to get approved.
With their rates better rates at the rate of change -- and your credit score absolutely if you could if you are sporting very very solid credit score is right now it's a great position to be a buyer -- a credible because the rates are so so attractive.
Well John thanks for your help today the web site is credit dot com we appreciate it thank you.
Filter by section