What good is a monitoring product if you don't understand what is beneficial or detrimental to your credit?  Often we have clients calling us in a state of panic because they received an alert from their monitoring company and they don't understand what it means.  Knowing the rules of credit and what factors impact the score can allow the monitoring product to give you information and the power to use your credit wisely.  There may be alerts that are insignificant and should be discarded. 

 

For example:   My credit score was a 745 and I applied for an increase in my limit on a Bloomingdales account.  My score dropped approximately 2 points from the "hard inquiry" Bloomingdales caused when they reviewed my credit profile.  After being approved I increased my balance to 70% of my limit.  My score dropped an additional 35 points since my balance became closer to the limit (this has a negative impact on the score).   My score changing to a 708 will not affect me since I have no intention of applying for a loan for a good 2 years.  This means any alert regarding these events should be discarded.

 

The next example: Having the same 745 credit score, being in the midst of buying a home and applying for a mortgage, I decide to open a new account at Sears.  Sears is offering a 30% discount with a new account and I want to buy a large appliance and pay no interest for a year.  Unfortunately I do not know that opening credit can decrease my score 60 points and if my new balance is close to the limit that will also drop the score further.  Once my score drops below a 740 my interest rate for the mortgage will increase.  After reducing down to under a 680, depending on the type of loan, I may be declined completely for the loan. This could be extremely disappointing and change my life dramatically.  It could also cost me thousands of dollars over the life of my loan if I get a higher interest rate.  Think of the power and savings just having this insight could bring me. What about the alert?  At this point it is not going to help me it will only tell me the problem has already occurred.

 

Having an education in credit and the scoring systems is of significant value as you can clearly see.  Once you know how the credit rules work if you want steady updates on every little change, at that point,  joining a monitoring service  will at least give you information that you can process and use.  You can also pull your credit every 4-5 months and pay for the score online.  This will not hurt your score since you are pulling your own credit and once you know how credit works you will see for yourself what you need to be concerned about.

 

We are now offering credit education products for consumers.  "Knowledge brings power" call us for more information if you are interested.