Money, finance, credit scores and other topics I failed in high school

Posted on August 27, 2007 in Money & Finance by DM

dollar sign graphic This article at MSN on Americans’ perceptions of their credit card debt was particularly timely for me today, given our recent experiences signing papers for a line of revolving credit. Here are a few things we learned, courtesy of the finance professional writing our loan:

Credit scores range from 350-850. The national average is about 750.

Every time a potential creditor checks your credit, it dings a point or so off your credit score. And yes, this includes employers, insurance companies, and all the other people who these days seem to think your credit is their business.

Whatever a creditor says is your line of credit, you don’t want to owe them more than half that amount - otherwise it increases your credit score.

Creditors rate you on - guess what - an A thru D scale. Grades are reported monthly to the three major credit bureaus. If you’re paying “as promised,” you get an A. If you’re 30 days late on a payment even one time, you get set back to a B. Sixty days late even once gives you a C. While it only takes one late payment to knock you down a grade, it takes six to 12 months to move back up a grade.

Signing paperwork for an unsecured loan is a little like Colonel Blake signing paperwork on M*A*S*H* - you’re never quite sure what you’re signing, and it’s all in triplicate.

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