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Unlocking the Mysteries Of Your Credit Score

By Michelle Singletary
Sunday, July 11, 2004; Page F01

I find it amazing that the credit reporting and scoring system -- something so important to how we do business -- is a mystery to many.

Credit agencies hold the financial histories of millions of people. The information is used to create a score (from a low of 300 to a high of 850) that determines how much you pay in interest for a mortgage, car loan or credit card. Credit scores can result in your losing your job or in the cancellation of your auto or homeowner's insurance policy.

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And yet, according to one study by Consumer Federation of America, only 3 percent of Americans could, unprompted, name the three main credit bureaus. What about you? Can you name them? They sure know who you are, and they've got your credit number.

So what should you do to become more informed?

To start, I suggest you read Evan Hendricks's book "Credit Scores & Credit Reports: How The System Really Works, What You Can Do" (Privacy Times, $19.95).

In his book, Hendricks tells a scary tale of how vulnerable we all are when it comes to our credit lives. This cautionary story is why his book is the July selection for the Color of Money Book Club.

"The credit scoring and credit reporting system is a work in progress," Hendricks writes. "It would be inaccurate to characterize the system as totally or always unfair. But it clearly cannot be depicted as totally or always fair either."

To be honest, I didn't think this book was appropriate for the average consumer. At more than 300 pages, "Credit Scores & Credit Reports" is an extensive manual that includes just about everything you will ever want to know about the system and then some.

But you know what?

Ignorance is not bliss. Ignorance can cost you money.


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