60-second video: Myths of credit

This was posted on one of my favorite personal finance blogs. I had it bookmarked last month but forgot to post it in my blog. It’s a short article and worth reading. Check out the video as well.

Original article link

60-second video: Myths of credit

Written on March 11th, 2009

While personal-finance journalists love to point out that we could save $3/day by not buying lattes, they usually don’t point out that having good credit can save you over $100,000 on major purchases, like buying a house or car. Credit isn’t as sexy as lattes, but since we focus on the big wins, today I’m showing you a 60-second video that dispels myths of credit.

Check it out — a guest post from Andy Jolls of videocreditscore.com.

I Will Teach You to Be….Credit Savvy…in 60 seconds by Andy Jolls, ex-FICO Exec and CEO, VideoCreditScore.com

We are bombarded by credit ads on Facebook, mySpace, random blogs and even Nascar races. Many of these ads are for free trial services where the costs kick in before you get a chance to understand what you are buying. So here’s the skinny on what you need to know about credit in 60 seconds

  1. More than one You have three credit scores from 3 different credit bureaus
  2. Lots of models Most used scores are FICO scores. 90% of all mortgage lenders.
  3. Myth: No car, no house no worry: your credit standing can impact employment, insurance and lending decisions – don’t fight it, accept it. – 20% of all employers look at it now.
  4. Swingers: Your credit score can vary from bureau to bureau – 29% of consumers have 50 point swings
  5. Free? You can your report for free at annualcreditreport.com or get a free 30-day trial with your FICO score.
  6. Myth: Closing cards helps you. Sadly, this hurts your score as it lowers the credit available to you.
  7. Myth: You have to keep a balance to build your score. Ugh. No. Not true.
  8. Myth: Checking credit scores hurts. Nope, as long as you are getting it from a non-lender your score is unaffected.
  9. Myth: Online loan shopping hurts. Truth is all inquiries in a 30 day window for home loans are treated as 1 inquiry.
  10. Credit Repair Master#^$@*!… You don’t need a partner to master credit, in fact the FTC says you should “do it yourself”.

As Ramit and I agree on not sweating the small stuff, I want you to focus on not obsessing on your FICO score. Instead, I want you to learn the important elements – such as pay on time, and eliminate balances – and develop habits that will keep your credit score high for years to come.

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