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Tuesday, May 3, 2011

Personal Finance 101: Get All 3 Of Your Credit Reports--Free!

The first step to getting any financial house in order is to get your Experian, TransUnion, and Equifax credit reports free of charge once every 12 months at

Too many things show up on your credit report to be completely ignorant as to what's on it!

In addition to your credit report, your credit SCORE (which is completely different and NOT free) is also important, because the score is calculated based on what's on your report, and your score is what determines the rate on your mortgage, the deposit (if there is one) on your cell phone plan, the limit (or rejection) of your credit card applications, and in some cases your credit history and/or credit score affect your ability to get a job (say, in a bank, or anywhere dealing directly with the company's cash or other people's money).

Information on the FICO (Fair Isaacs & Company, the company whose software creates it) score here.

In the age of endless merger & acquisition activity, it is very easy for WRONG information (or duplicate information belonging to the same source bill you had x years ago that has since been transferred around to different creditors and represented as a new item) to be on your report without your knowledge.  If you don't know it's there, you can't dispute it to get it off.  Knowledge is power.  And knowing what's on there and what amounts they are on there for is the first step to being able to write out a plan and a budget to handle it all (and not necessarily all at once).  Personal debts that will never show on your credit report should also be part of your financial plan since they are often even more important from a personal reputation point of view than the "commercial" debt.  They just also tend to be the most flexible on repayments.

For people who have debt to pay off, the typical two ways to handle them are either to pay off the one with the highest interest rate first, no matter the balance, or the "snowball" effect where you pay off the smallest bill to feel that sense of accomplishment and keep knocking down the next smallest, next smallest, etc. until only the last major bill is left, at which point you've built up the confidence and the sense of accomplishment to focus and knock down that last one.

In case you were wondering, here are answers to "Why Is My Credit Report Important?"

And don't forget a biblical perspective on's not MONEY the Bible said is evil, it's the LOVE of money! (It's also where the nice graphic above came from!)

And from the same site that brings the financial house image below, comes advice on how to make sure your financial house is built on rock, not sand.

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