Family Fundamentals: Your credit score can have profound effect 

Writer: Martha Filipic   (filipic.3@cfaes.osu.edu; 614-292-9833)

Source: Christine Olinsky, OSU Extension, Family and Consumer Sciences

Consumers can get one free report each year from each of the three agencies that compile such reports: Equifax, Experian and TransUnion. You're correct that the reports don't include your overall credit score, but reviewing your credit report allows you to determine if the information is accurate. If it's not, you can take steps to correct it.

Knowing your credit score can be helpful -- it's like knowing how much you have in your savings account. If it's too low, you can work on increasing it. If it's in good shape, you can enjoy a sense of well-being.

A good credit score can help you get a better interest rate on a loan, qualify you for credit card deals, and reduce your insurance rates. Even some phone companies use credit scores to help determine the terms they offer you.

The system most often used by lenders is the FICO score, developed by Fair Isaac, Inc. FICO scores range from a low of 300 to a high of 850. The higher the score, the better. Anything lower than 620 is considered risky.

Higher scores can save you money: According to Fair Isaac's website (http://myfico.com), someone applying for a 30-year fixed-rate mortgage of $150,000 could currently qualify for an interest rate of 3.855 percent with a monthly payment of $704. A person with a FICO score of 630 applying for the same loan would have to pay 5.444 percent, or $846 a month.

What goes into determining your FICO score? Fair Isaac says the most important factor is paying your bills on time. Second is the amounts owed compared to your credit limits -- you don't want to max out your cards. Less important but still factored in are the length of your credit history (longer is better); the amount of new credit you apply for (applying for too many new accounts within a short period of time can damage your score); and the types of credit you have (major bank credit cards, mortgages and car loans are more beneficial than store-issued credit cards).

The easiest way to get copies of your free credit reports is to contact the Annual Credit Report Request Service, sponsored by the three credit reporting agencies, by visiting http://annualcreditreport.com or by calling toll-free 1-877-322-8228. When you order online, you'll have the opportunity to purchase your credit score, as well.

Be careful of using other services that offer free credit reports or even free credit scores. Many have fine print that requires you to try a "free trial" of their product, usually a monitoring service, that carries a monthly fee. If you use the Annual Credit Report Request Service, you won't have to worry about that.

Family Fundamentals is a monthly column on family issues. It is a service of Ohio State University Extension and the Ohio Agricultural Research and Development Center.