I recently came across a testimonial from a young man in a panic that he saw his credit score devalued by a few points, like 754 to 738 (the scale goes from 300 to 900).
I understood that the boy was keeping a close eye on his score. He did not understand that he was being subjected to such a “downgrade” when he had not changed anything in his payment habits.
Hence his question: WHY, MY GOD?
Two things emerge from this “sad” story, the outcome of which remains a mystery.
- She reminds us that the credit score is determined using a relatively opaque mechanism.
- She shows us how the credit score can become an obsession for some.
Hence my invitation to breathe through your nose: stop flipping over with that.
A big market
Do not think that the credit rating does not matter, on the contrary, it is too much. It opens (or closes) the door to the best credit conditions, it influences the cost of home insurance premiums and sometimes conditions access to housing.
This probably explains why it generates so much anxiety in some people. It must be said that all this personal data which is dispersed in nature contributes to fuel this paranoia. In others, it seems rather to satisfy a curious appetite for statistics, as in the baseball fan.
Still, a small industry has found the ground to prosper there: more and more companies are offering us to continuously monitor the slightest variations in our score, the type of subscription to which our friend has certainly subscribed. spoke above.
If it is not in money, it is with his personal information that we pay for these services. We have nothing for nothing. I’m obviously thinking of Equifax and TransUnion, but also of Credit Karma and Borrowell.
If the goal of this constant monitoring is to improve your financial life, you are wasting your time (and your money). Staring at your score will not make it go up.
What is the score for?
These measures were not invented for individuals, but for businesses, especially lenders. Personal services are something else, a variation, a sideline for credit agencies, a way to get a little more juice from personal data (at the expense of consumers who own this personal data).
Let’s come back to the number, to the score. What is it about ? This is theoretically a reflection of our payment and reimbursement habits. So what ? If you pay your bills monthly and don’t overuse credit, your rating will be good.
Mind your own business, and your score won’t be a problem.
- All the same, errors, frauds and anomalies can mar our file. The credit agencies are washing their hands of it. Each year, order your file (not your score) from Equifax and TransUnion. You will find all your history there and may require corrections if it contains errors.
- The two most decisive elements in the score: your payment discipline and the use of your credit capacity. Focus on that and you should be fine.
- Lenders don’t just base their credit on credit history, but also on salary, frequency of job changes and sometimes moves. They have a preference for stability.