Even though we’re told to safeguard our passwords and personal information, most of us get lazy now and then. When that happens, we put ourselves at greater risk for identity fraud. What does a thief want? Your credit. He wants to buy and sell off or your good financial standing. For that reason, it’s good to check your personal credit score annually. By law you are entitled to one free credit report a year. It probably won’t show the score, but you’ll see the activity. If you want the credit score, you may need to pay a nominal fee.
The reason for having the actual credit score would have more to do with your own financial security. By knowing that magic number, you can get a pretty good idea of what kind of interest rate you would receive on mortgages and car loans, as well as how much you will qualify for. The only caveat these days is that many banking institutions don’t like to loan more than $200,000. Think of it as a gift instead of a hassle. That credit score is partially based on debt to income ratio. The less you owe, the better. Scores are also based on how punctual you are about paying off your loans.
Credit scores over 650 are decent, but you really want to get over 700 to have some leverage. If you get into the 800 area, you’re in the excellent category. Even so, you can send that score plunging if you make too many loans and load up your debt too much. No matter how good you look on paper, try to avoid too many credit cards. Not only can they get out of hand really fast, they are vulnerable to both physical theft and internet theft. One credit card is enough. Only use it when you absolutely have to. Don’t fall for all the incentives. It’s better to be frugal and keep your credit score high.