Credit score becomes valuable number to know
Posted September 22, 2008 5:43 p.m. EDT
Updated September 23, 2008 9:29 a.m. EDT
Raleigh, N.C. — In the tightening nationwide credit crunch, financial advisers said the time spent checking your credit report might be the most important half-hour you spend all year.
Lenders were already tightening credit because of the mortgage crisis, but the recent instability in U.S. financial markets has ratcheted up that trend even more. Where people used to be able to obtain loans with a credit score under 500, credit scores now need to top 650 to be assured of getting a loan, experts said.
State Treasurer Richard Moore said that maintaining good credit is more important than ever in the current financial flux, which eventually trickles down from Wall Street to Main Street.
"Good credit is going to mean more a year from today than it did a year ago, I can promise you that," Moore said.
"Pay attention to your credit, and have an understanding you may have to begin paying more on rates when rates reset. Make sure you have the best credit you can so you're not stuck with one place and you can shop your debt," he said. "I think people are going to be able to get the things they got before, but they're probably just going to have to pay more for them."
Consumers also need to tighten their own belts and do better at sticking to a budget, he said.
"I don't think we'd be doing our jobs if we were telling people everything is going to be alright. I think that's one of the problems that's actually gotten us into this mess," he said. "I'm so tired of hearing people say, 'Oh, we need the consumer to spend, spend, spend.' All that's great ... but we all have to live within our means, and we're doing a disservice telling people they don't have to."
Ken Long, a credit counselor with Vision Education Credit in Raleigh, said some people have had trouble renting apartments recently because their credit is so bad.
"The fact of the matter is, your credit score is actually more important than your Social Security number," Long said.
Both Long and Moore urged people to get to check for possible errors or other information that could affect the overall score. Agencies usually charge a nominal fee to get the score itself.
"The most important thing is to clear up anything that is negative and is not accurate. Anything that is not true you can easily dispute," Long said. "It's absolutely free. You can do it online, or you can mail it in."
Some services charge consumers to check their credit reports, but he said people can invest a little time and do it themselves. Many people procrastinate, though, and wind up in his office after getting crunched by tight credit, he said.
"Don't wait. If there is something you want to do – if you want to get into an apartment, want buy a house, buy a car – do something now. It could be a month or two before you can get your credit when you need it," he said.