waxwabbit

Hi

Like many of you, I guess ur constantly confused by ur credit score, and how vital it actually is over here to your day to day living:

Just wondered, what things effect your score?

Im looking at getting a car soon (for whenever I learn to drive and pass my full license for the 1st time), and am looking at car insurance. Will giving my SSN to Insurance Cos online, effect my score, by them just looking at my credit report? I believe some check ups do not effect your rating?

I know, that when I come to get a car, even if paying outright, I will form some sort of payments to further help my credit........I just don't want my hard working year of credit building to go to waste by looking around for insurance.

For the record, Im looking at getting a Chrysler 300 Touring....yummy

Bob

credit companies looking at your report etc does ding the score, but if you have a bundle look at the same time, it won't have a big effect, it'll count as one ding.

Things that'll affect your score badly are not paying your bills on time, having lots of open lines of credit-having credit cards that you don't need are bad basically.

Looking around for insurance shouldn't ding your score, don't know what the SSN has to do with it though...

There's a few good links in the finance thread that's stuck up in this forum though

AdobePinon

Insurance companies like to run a credit check before giving you a quote. They like to pretend that a high credit score corresponds to a repsonsible person who'll be less of a liability. Not all insurance companies run credit checks, but some refuse to talk to you without your SSN (and hence I refuse to talk to them).

fatbrit has talked somewhere on this forum about credit checks and insurance companies. Can't be arsed to find it now, but I'm sure he'll show up before long.

Ray

To all Chrysler saleman ... you have a mug punter on the way ....

Dan725

Err, if you don't already know how to drive, why are you thinking about buying a brand new car? Not only will insurance be very expensive, but you'll have a good chance of having a bump.

If I was you I'd forget the credit and buy an old bomb to run around in for several months.

Ray

Do'nt worry Dan ..Waxrabbit .. could not even find his way to the car dealer ..without coming on here and asking for a map ...LOL...

dbj1000

fatbrit

Insurance companies should mark that their enquiry on your credit report was for insurance purposes, and the FICO scoring algorithm should ignore it. It should be noted that insurance companies usually use their own proprietary algorithm for rating risk. Whether insurance companies choose will downgrade you for shopping about, I have no idea. But I rather doubt it.

When you apply for credit for your car, the rule are somewhat different. Here it is straight from the horse's mouth:

What to know about "rate shopping."
Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though you’re only looking for one loan. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry. In addition, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. (Snipped from: http://www.myfico.com/CreditEducatio...es.aspx?fire=5)

Also I agree with other posters: think carefully whether you want to waste so much money in a depreciating liability when you are a new driver. A five-year-old Saturn could be bought for cash, won't need you to insure against loss, and is much more suitable for a new driver.

neil

Not entirely true from what I've heard - you should hardly ever close a credit card account. A reasonably large portion of your credit score actually comes from the ratio of how much credit you have available to you to how much you actually use. Therefore your ratio is much better if you have cards that are technically still open but that you don't use.

fatbrit

Also, if you happen to close your oldest account, you've made your credit history shorter and this will lower your score, too.

However, if you're unlucky to be the proud pound holder of a credit card from one of the really nasty and vindictive ones like C1, Providiots etc., might be better to cut your losses rather than providing them a longer period to be able to screw you royal. Also, if you have 4 or more personal cards and high limits but run relatively low balances, a little selective pruning might be beneficial and reduce your exposure to risk.

Bob

Well it's true if you've only got a couple cards...but if you've got a couple credit cards and a few store cards that you don't use, it'll be a ding against you because there's the potential for you to max out way beyound your means..

neil

I heard a ratio of 20% used to available is the ideal, so I guess that figures into it. I really just meant think carefully about closing accounts because most of the time it probably could screw you up.

looselips

Hi waxwabbit....try Creditboards - it's a great resource for all things credit related. Start at the FAQ's section for newbies and work your way from there to search.

If you want to get copies of your reports and score you can get 20% off myfico.com through the boards fyi.

TRPardoe

You are correct here. It is not always a good idea to close an unused credit card as it impacts your credit to debt ratio.

For instance, if you have 2 cards, one empty and unused with a $10,000 limit, and one with a $10,000 limit and $9,000 used up. You close the unused card, your credit to debt ratio effectively halves and makes you look like you owe too much money.

One thing that lenders look at is the maximum amount you have borrowed in the past. Someone who has never borrowed a large amount is much harder to finance than someone who has already borrowed large amounts and paid them off. This is why first time buyers often need a co-signer.

Rule #1 - never be late on your Mortgage payment
Rule #2 - never be late on a Car payment.
Rule #3 - never be late on a Credit Card payment.

Not paying your Medical Bills is a bad idea but does not have the same impact as Rules 1 through 3.

I once posted an excellent link to a PDF which explained the credit scoring system and now I cannot find it. When I do I'll post it again.

TRPardoe

Here it is..................