Say Cheese
Posted on November 14th, 2007 by Marc Chase Posted in Credit Scores | 9 Comments
Imagine I just took a picture of you; and it’s going on this blog for the world to see.
How’d you look?
Chances are, unless you’re one of the annoying lucky few who always look perfect, it’s not the picture you want the world looking at. If you’re like most of us, you’d want a chance to at least do the hair check thing.
Your credit score is no different.
Rarely does it look good all the time - but with forewarning and a little primping, it can take as pretty a picture as anybody.
Here’s why I bring this up.
We’ve had almost a hundred emails from clients since Monday asking how they can keep their credit scores at acceptable levels. I can tell by the way the questions are presented that some of you may not understand what a credit score is.
It’s not a number attached to your credit file.
Think of it as taking a picture. It calculates a score based on the information it saw the very second the flash bulb went off (you pulled credit).
No more, no less. That score is good for that second only.
I'll tell you about my credit status today. If I pull my credit right now, I know I will be around a 680. If I pull it the day after tomorrow, it’s going to be about a 770.
Why such a difference, and how do I know it will adjust so drastically?
Last month I maxed out two large credit cards for some new software we’re developing. My closing date on those is tomorrow.
If I request a credit score today – it’s going to show last months balances and ding my score about 100 points. However, I paid them off last week and I know the closing date, the date they report to the bureaus is tomorrow. Starting from tomorrow, and for the next 30 days, they are going to show zero balance and that's worth about an extra 100 points.
What a difference a day makes – huh?
Apply this simple, one day difference to a home loan, a car loan and 3 or 4 credit cards. When you consider what a difference 48 hours makes in interest payments across all of those items, it would equal about $2,000 per month more then if I wait another 48 hours.
I Have a Question for You
When you last applied for any type of credit – did you plan it to that one specific day; the day your credit profile looked its best? Most people don’t and as a result, are paying hundreds, if not thousands of dollars in unnecessary interest every month.
Now, I’m not saying let your credit go to hell until you’re applying for something. I’m just trying to explain what a credit score actually is and how important it is to prep it for that important photo-op. Know your closing dates, know your balances and align them with your shopping needs.
If you understand the concept, your credit profile is so easy to “prep” that you can literally cut your expenses to fractions of what they would be without some simple planning.
Really, really good post Mark
I don’t think I ever really considered how a score is connected to your credit report. I guess I did think it was a constant number attached that fluctuates as your credit does.
One thing I do know for sure is I never planned a day to apply for things. I’ve always just “applied”.
After thinking about what you wrote, I cant imagine how many bad deals I got by just randomly applying for credit cards, cars, circuit city etc.
Excellent post and thanks
I usually look bad on photos. Good thing i don’t fare as badly on my credit score.
That mouse was really the puller for me to read this article. Certainly first impression counts for a lot especially when it comes to credit scores.
Your 48 hours explanation is definitely a eye opener and I know I learnt something new today.
Hey I love to hear when people learn something.
And folks, I’ve read a couple Allen’s books. Great stuff if you’re thinking about real estate.
Welcome to the blog Allen
I look pretty dang good in pics :), but my scores are somewhat ugly
Elaborate introduction, nice writing! Keep it up!
Happy holidays!
Well thank you sam
Welcome
Damn my credit score !
Nice picture, pulled me in, Ratatouille right?