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Credit Score Secrets

So you are venturing off into the world of debt, and you are just starting to build good credit. You are starting good financial habits, like paying the bills on time and paying your credit cards in full every month. Still, you’ll be surprised to learn some secrets about your credit score that you wouldn’t know unless someone told you. You have dozens of credit scores. All this talk about checking your “credit score,” yet there’s more than one kind! You might’ve heard of the FICO score, which is the “standard” credit score. The three major credit bureaus – TransUnion, EquiFax, and Experian – use FICO’s formula to calculate your score. However, your score may differ slightly at each agency because they each have different information about you. Besides depending on different information the credit bureaus have on you, your credit score may also differ based on who’s pulling your information. Credit scores don’t take a one-size-fits-all approach. Instead, there are different credit score formulas for different needs. For instance, an auto insurance agency may calculate your score differently than your mortgage company. In this case, each company is looking specifically at different types of credit history and information in your report. Some companies offer non-standard credit scores. You regularly check your credit reports and credit scores, but those numbers could be far from the generally accepted FICO scores. Some companies provide proprietary scores that are not in any way based on FICO’s formula, dubbed FAKO scores. The three credit bureaus have their own proprietary FAKO scores, such as the VantageScore. You may also find FAKO scores from websites that offer free credit scores. Wherever you find your credit score, find out if it’s based on FICO. It’s important because most companies base their decisions on your FICO score. Your credit score is not affected by your spouse’s credit history. If you’re about to get married (congrats!), you’ll be happy to learn that your credit histories will not impact each other’s scores. After marriage, you will both still have your separate credit scores. However, your credit scores will affect one another if you two open up any joint accounts, such as credit cards or a mortgage. The lender will look at both credit histories to determine credit worthiness. Use this to your advantage to build or maintain good credit. Although your spouse’s score won’t affect yours or vice versa, you should still talk about finances in depth if either of you have less than good credit. There you have it – three facts about your credit score you [probably] didn’t know! So go out there, and use credit wisely and to your advantage.

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