Judge Napolitano, is a former New Jersey Supreme Court court judge, and now a nationally syndicated tv columnist.
While there are judges and former judges on all spectrums of politics, for their personal life, and in particular their financial life. judges as a whole tend to be fiscally conservative. Therefore, Napolitano recommends keeping close tabs on your credit score.
Credit scores, also called FICO scores, are scores that banks, auto companies, retail stores and more use to determine your creditworthiness. Approximately 90 percent of all credit decisions made in the U.S. are dependent on your credit scores.
Credit scores are generally a combination of the history of your payments made on previous positive credit decisions, the ratio of debt owed to the amount of credit that is available to you, how many years you have had credit, your credit mix of retail accounts; credit cards; installment loans, signature loans, vehicle loans; and mortgages as well as a history or lack thereof of a lot of new credit applied for and received.
How Much Can You Borrow and What Rate Will You Pay?
The reason it is vitally important to keep tabs on one’s credit score is that when it comes to borrowing, whether it be via car loan, a mortgage to buy a house, opening up a credit card or more, the rate that you will pay and how much you can borrow will vary widely depending on one’s credit score.
Let’s take credit cards as an example. If you have excellent credit, the average rate is around 13.9 percent. Apply for the same credit card with good credit but not excellent credit, and the interest rate will bump up to around 19 percent. However, if one has only fair credit, and the interest rate is around 23.25 percent. Revolving store cards are even worse, at around 24.4 percent. As a consequence, your buying power is much greater, and you will pay much less money in interest if you have higher credit scores.
How Do You Check Your Credit?
Judge Naplotano says that by law, you are entitled to one free credit report every 12 months from each of the three major credit card reporting agencies, Equifax, Experian and TransUnion.
Annualcreditreports.com is the only authorized site to obtain your free credit scores, and one can do it online or by telephoning 1-877-322-8228.
It’s important to get all three because you may be unpleasantly surprised to find out that one or two are using erroneous information. If you do find errors, then contact the particular credit reporting agency in writing about your dispute.
Next, understand carefully how to improve your credit score. The major credit reporting services, as well as free services such as CreditKarma.com, will offer a ton of tips on how to strengthen your score.
Take advantage of these at an early age. Unfortunately, many people wait way too long as an adult to understand how credit works. And as the judge says, ignorance of the law is no excuse.