Your Credit Score: How to Improve the 3-Digit Number That Shapes Your Financial Future

by Liz Pulliam Weston

Today, a good credit score is essential for getting decent terms on credit--or for getting credit at all. But that's just the beginning: Your credit score rating can be reviewed by everyone from employers to cell phone carriers. Now, MSNBC/L.A. Times journalist Liz Weston has thoroughly updated her best-selling guide to credit scores, with crucial new information for protecting (or rebuilding) yours. "Your Credit Score, Fourth Edition" thoroughly covers brand-new laws changing everything from how your credit score can be used to how you can communicate with collectors. This edition also adds simple graphics revealing exactly how much skipped payments, bankruptcies, and other actions will lower your credit ratings, and how long it takes to rebound. You'll find new information on "FAKO" alternative scores, expanded coverage of short sales, foreclosures, the new FICO 8 Mortgage Score, and when to "walk away" from a mortgage. Learn how to protect yourself against new credit risks from social networking and mobile banking and how to safeguard against unethical or illegal use of credit scores by employers. Weston updates her expert guidance on using FICO 08 to raise your score, fighting lower limits and higher rates, maintaining the right mix of cards and balances, bouncing back from bad credit, choosing credit "solutions" that help, not hurt... and much more!

Genres: Nonfiction, Finance, Reference, Self Help, Personal Finance, Business, Ebooks

331 pages, Kindle Edition

First published October 14, 2004

Reviews

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[JC · Rating 4 out of 5]

This was an excellent reminder of how stupid credit scoring can be and one number really can change a person's life. Their is a pretty in depth analysis of what the credit score is and how to improve it and what makes it move up and down but of course as is always the case - no one knows for sure. I worked for a law firm that dealt with helping people clean up their credit reports by disputing negative accounts and so I knew about 80% of the material in this book. I would say that it is must know information for anyone over the age of 16. I found VanityScores interesting as I'd never heard of those. It will be interesting to see if those take over the FICO score. I also didn't know that my insurance premiums are directly tied to my credit score. If so much of our life is controlled by the credit score, the credit reporting agencies should really have to be held more accountable. It's crazy.

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[Velvet · Rating 4 out of 5]

Decent info though a little outdated

The book was solid in its advice and history. The author knows her subject and gives good basic information about credit scoring and how it’s derived and applied. Additionally she offers suggestions about how to raise your score, and warnings about what NOT to do, like closing older credit accounts because the longevity of the account and the unused credit balance, may be helping you more than you know. The only downside is that it was written a decade ago and many things have changed since then. But most of the general information still applies.

[Drucka45]

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[Lorilin · Rating 5 out of 5]

I'm a huge Liz Weston fan. I think The 10 Commandments of Money: Survive and Thrive in the New Economy unknown is one of the best, most realistic books about personal finance I've read (and I've read a lot of books on the subject). I love that Weston is so no-nonsense about this potentially emotional subject, and her advice is smart, even clever. I started reading her books after my husband and I completed Dave Ramsey's Financial Peace University (which is a wonderful program and helped us get completely out of debt in less than a year, btw), and I remember thinking how refreshingly practical her advice was compared to his somewhat idealistic "vision." Weston lays out the facts in a straightforward, easily understandable way, and her message is always optimistic. She isn't big on coddling, but it's readily apparent that she believes EVERYONE has the power to get his or her financial sh*t in order.

Your Credit Score is one of her more popular books (which is why it has been updated five times already). I've read previous versions, though not all of them. It's hard to spot the differences, honestly. In this edition, I see that she has added a section on Vantage Scores, which I actually wasn't familiar with, so that's great. She's updated facts, figures, and phone numbers. She addresses issues related to finances and media (like using your smartphone for banking or posting specific personal info publicly that could help hackers guess your passwords or usernames, or the answers to your security questions.)

Otherwise, most of the info in this edition is the same, I think. She describes how scores are calculated, she gives steps for making your score stronger, and she gives advice for dealing with potential credit disasters like limited credit, identity theft, divorce, etc. It's a very comprehensive book on the subject of credit scores, and is going to be incredibly helpful for for beginners.

If you have another version of this book, you probably already know most of what you need to. But if you are looking to know more about your credit score and haven't checked out this book before, you should. You will most definitely not be disappointed.

[Adrienna · Rating 4 out of 5]

This book is straight-forward, logical, and very helpful in comparison to the comical, cutesy book I just finished on financial issues such as credit scores. I wrote several pages of notes to clearly understand the difference between essential, important, and nonessential bills. I know in the past, I read Suze Orman and watched her video tapes/DVDs on financial literature and learning about credit scores, even done minor writing tests to see what bills are important and not so important to me. However, this book gave it to me raw! Real info to live by and the consequences that can happen if not paid. With FICO scores and such, I skim over since it is financial jargon but this author also gives us vantage scores which so far I've never read in these types of books.

There is also hope with bad scores to improve your situation and become more credit-worthy in the lender's eyes and with good scores, you have to keep watch and maintain. Now I have experienced excellent credit to poor credit in just a whammy of unforeseen circumstances. We should also review public records and collections, not just getting our credit scores from the 3 resources. This was valuable info too! These golden financial nuggets, I will take to the bank and work hard to raise my credit score back to good standing.

[Tooey · Rating 5 out of 5]

I don't think I've ever been happier at finishing a book. I feel completely competent to manage my own credit and finances. For how strongly credit scoring affects our lives, shockingly few people are educated about how it works and how to handle the credit available to them. I intend to recommend it to everyone I know.

Aside from credit management and credit scoring, this book also covers identity theft, auto loans, student loans, personal finance management, bankruptcy, and insurance scoring.

[Stephen · Rating 4 out of 5]

The information given is good, made understandable for those not in the financial industry. It also goes in to myths that can actually hurt your credit and ways to fix or raise your credit score. I could have lived without the examples of how much more people pay for cars/houses/loan payments because their score is lower and they interest rate is higher but...

This is too much like work related reading. I'll come back to this.

[steph · Rating 4 out of 5]

This book was really helpful in telling me about credit scores - from what makes up the number to how to fix it to protecting yourself from identity thief's etc. I've been reading a lot of credit card forums on the web lately and it lot of the information discussed on the forums is talked about in here so that helps drive the point home for me. I'd rec this book to anyone interested in being wiser when it comes to the knowledge and power a credit score can have on a individual.

[Lizzette · Rating 4 out of 5]

Concise and to the point while touching on all the key factors that can affect your score. Everyone can benefit by having a good understanding of their credit and how to positively affect it. It's a game and this book allows you to learn the rules and how to play the game strategically and effectively.

[Dennis Littrell · Rating 5 out of 5]

Just about everything you need to know

L.A. Times and MSN Money columnist Liz Pulliam Weston knows money and she knows credit, and in this information-packed, no-nonsense book she gives you just about everything you need to know about that "open sesame," that shibboleth of numbers, that Holy Grail of liquidity--your credit score!

First, what is your credit score and why is it important? It's a three digit number ranging from 150 to 950 (p. 16) that creditors use to determine whether you are a good risk. If it is low, they won't lend you any money, meaning you can't buy a car or a boat or a house unless you pay cash; and if it is somewhere in the middle, you'll pay higher interest rates than those with a higher score.

Second, how can you find out what your score is? As Weston explains there are three major credit bureaus, Equifax, Experian, and TransUnion that calculate "real" credit scores (either FICO or NextGen). You can contact them over the Net or by phone (Weston gives addresses and phone numbers), but here's the rub:

"Congress recently did give US residents the right to get free copies of their credit REPORTS annually from each of the three bureaus. But that doesn't include the right to free SCORES; the bureaus can and will continue to charge for those." (p. 25, my emphasis) The point here is that you can get your credit report for free, but they won't tell you the score!

So I checked out some Web sites and found out that they wanted me to sign up for their credit monitoring services after which I would get my score, or I could get the score by itself for a flat fee. Since I found out my score a couple of years ago when I refinanced my house, I declined the offer. One thing I didn't like was having to give out my Social Security number to get the score. As Weston advises, under the heading of "Get Stingy with Your Social Security Number" (p. 108), you should "...keep your number to yourself. If the business insists that it needs the number, you can either do business with someone else or 'misremember' a digit or nine to protect your privacy." Hmm. Never thought of that.

However the credit bureaus mentioned above are presumably safe, and at any rate for most people there is no other way to get your score. (And of course, "misremembering" won't work in this case.)

Third, what information goes into making up your score and how can you improve it? And finally how can you repair damage done to your credit and lift your score high enough to get credit and good interest rates?

Weston goes into detail answering these questions. She relies on the experience of people who have been there and done that, and upon her personal experience as well as information culled from the many letters and emails she gets from readers. She makes "what makes for" good credit scores crystal clear.

By the by, it is interesting to note, as Weston does in Chapter 9, "Insurance and Your Credit Score," that bad credit can affect what you pay for insurance as well as what you pay for credit. She writes, "Insurers...believe credit is an excellent predictor of whether you'll file a claim--better, in fact, than almost any other factor, including your previous driving history." (p. 130) So what we have are credit-based insurance scores for all kinds of insurance, auto, home, health, etc. What insurers have discovered is that there is a strong correlation between low credit scores and high risk (for them). Although correlation is not causality, and does not in a scientific sense constitute proof, the insurance companies will tell you that they make money from those with high credit scores and lose money (through claims) from those with low credit scores. Weston even has some stats on pages 132-133 attesting to this fact.

Why the correlation? I think most people would say (and Weston makes this most reasonable surmise) that people who are careless with their money are likely to be careless in other aspects of their lives as well.

One more thing: you can get a fair idea of how credit worthy the credit people think you are by the amount of junk mail you receive offering to lend you money! I have a pretty good score and I must get fifty to a hundred offers a year. And of course I have no need to borrow; but isn't it always the case: those who least need credit are the ones who can most easily get it, and those who need it the most are the ones least likely to get it! Life is an eternal Catch-22.

By the way, another annoying Catch-22 of the corporate world is revealed by Weston as she quotes "Glen" whose insurance costs increased because his wife max'ed out her GAP card. He calls a number and is told that his credit is scored "according to how the insurance company wants" it to be scored. He is then told that the insurance company "can't discuss the criteria [because] it's proprietary"! Ah, yes, the old proprietary dodge.

Anyway, in this age of identify theft and other kinds of information fraud, this book belongs on the syllabus for Personal Finance 101, an ongoing, real-world, absolutely required course for all of us living in the postmodern age.

--Dennis Littrell, author of “The World Is Not as We Think It Is”

[Liliana · Rating 5 out of 5]

Very good!

[BOBBI · Rating 5 out of 5]

Very interesting book. Touched lightly on many subjects. Author is very knowledgeable. Touched on what should and shouldn't be on your credit report, and what to do to resolve problems.

[Laura · Rating 5 out of 5]

this book is very easy to understand .. breaks down all the scoring process .. i am implimenting several of the ideas and they have work .. rec'd it highly! .. L

[Olexandr Prokhorenko · Rating 3 out of 5]

Pretty much common sense

[Víctor · Rating 4 out of 5]

A must-read to improve your credit score.

[Pat · Rating 4 out of 5]

very easy to understand

[Eric Xia · Rating 1 out of 5]

This book could be summarized in a few brief articles about credit, and much of the content presented is obvious. My notes:

1. Credit scoring came into being in the 1950s when the new firm Fair Isaac convinced lenders that formulas based on math were better indicators of borrower behavior than loan officers
2. Credit scoring allowed lenders to feel more confident about making loans, thereby leading to the explosion of consumer credit in the 1900s
3. Credit-scoring systems were designed for lenders, not consumers, i.e. scores weren’t created to be easy to understand
4. The 5 Main Factors That Affect Your Credit Score According to Relative Level of Importance:
a. Payment History (35% of Score): recency, frequency, severity
b. How Much You Owe (30%)
c. How Long You’ve Had Credit (15%)
d. Your Last Application for Credit (10%)
e. The Types of Credit You Use (10%)
5. VantageScore as an alternative to FICO is becoming bigger
6. How to Improve Your Score
a. Start with your credit report
b. Pay your bills on time
c. Pay down your debt
d. Don’t close credit cards or other revolving accounts
e. Apply for credit sparingly
7. People of ages 18-20 without a parent/guardian/spouse co-signer need to show they have sufficient income to get a credit card
8. The FICO and VantageScore formula ignores any inquiries of your score by yourself; this does not hold when you ask a lender to check your score, known as a hard inquiry

[mybookaday · Rating 5 out of 5]

I first read Liz Weston’s excellent Your Credit Score nearly ten years ago, and her advice on financial health has been solid all along, as have my FICO scores. As I revisit my copy of her book, the second printing from May 2009, page 57 offers a key suggestion. "If you go online a few days prior to this closing date and pay off your bill, the balance that’s reported to the bureaus will be dramatically reduced.”

Fully understanding the relation between your credit card's closing date and its due date for credit scoring is crucial. Before the Internet and FICO, people would receive a bill in the mail and pay it within the grace period, now scoring counts and you can benefit online. Reducing your credit card debt is central to your financial health, and generally making the closing date your new due date helps you there.

Your score is a lifestyle choice, and being timely on your bills is what works for optimizing your FICO score, so that you get the lowest interest rates on your loans. Liz Weston motivates you to do so.

[Bobby]

I always keep my consultant friend Harry close, he will remove late payments or any item you intend to remove and boost your credit score to middle 800s at least within weeks for an affordable price, you can message him on "harrylog04 at gmail dot com". Your credit score can also affect your insurance rates, insurance companies think your credit score reflects the risks involved in insuring you, for me this is very important because insurance is expensive and a bad credit score could increase my insurance premiums dramatically, so contact Harry now, you can say you got his contact from me Bobby.

[Joee · Rating 4 out of 5]

My revolving credit balance has been a little too high for me to afford which causes a lot of dames and reduction in my credit score. My sister just had to refer me to George Hortz who had to pay off the credit debt for me rather than moving it around and got 3 new credit cards approved in my name once again without any damages popping again on my credit report. He is reliable and a very trustworthy person just get in touch with him through
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[Robert Jam · Rating 4 out of 5]

until I was told about an unpaid utility bill from3 years ago, the utility company never called or emailed me. The mix up affected my mortgage, I reported to FTC but nothing happened. After a google search directed me to SCS, they cleared my debts and increased my score to 780. I’m indebted to them. Here is their contact email:
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[Holly · Rating 5 out of 5]

This was an excellent detailed book on understanding credit reports and scores. I plan to look up some of the studies that the book mentions about debt and savings. The fact is credit scores do mean something so for those that say they don't need a credit score should look carefully at their insurance rates since those companies use credit scores to apply rates.

[Steven Sisk · Rating 4 out of 5]

Believe it or not quite interesting. Did you know that your insurance rates are based on your credit score? Me neither. The more you know.

[Amanda · Rating 4 out of 5]

Had some very good info that I didn't know, but also had a lot of stuff that didn't pertain to me (bankruptcy) and hooefully never will.

[Tere · Rating 5 out of 5]

Excellent read & very informative..!!

[Austin Luca · Rating 3 out of 5]

I can't give this book more than three stars, simply because the author seems to have no problem with keeping a balance on a credit card. While it might not affect your credit score, it's piss-poor financial advice. The other part I hoped to read was a formula for the credit score. While the author does offer some tips on improving your score, she admits that she doesn't have access to the formula, and that scores are different for each person. If you have a good foundation of financial knowledge, don't bother reading this book. If you don't have that knowledge, reading this book won't hurt you, except you need to remember DON'T KEEP A BALANCE ON YOUR CREDIT CARD.

[Molina · Rating 4 out of 5]

good!