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Watkins: Credit Ratings and Credit Scores – Part 1

By Boyce D. Watkins

Business Editor

Aug. 24, 2007, 12:01 a.m. - We’ve learned in the past about investing and managing money. We’ve learned about the importance of money. Perhaps you’ve even figured out why you’re broke. Now, we can determine why the bill collectors are calling your mama’s house and you’re only able to get a car from places that bill you by the week. Perhaps you haven’t had these experiences, but I don’t want anyone to feel embarrassed. It’s not about where you are, it’s about where you’re going.

Let’s talk about CREDIT. Credit is critical, it’s crucial, and it can crucify you if you don’t keep it together. It can keep your bank account enslaved like Kunta Kinte from “Roots,” and it can even keep you from getting a job. A lot of people ruin their credit while they’re young, and it takes years to clean up the damage.

Credit is a powerful drug, especially for young people. I see college students hitting the “credit card crack pipe” on a regular basis, only to look quite pathetic after they crash. Let’s start with the basics and build from there. You aren’t going to learn everything from one article, so make sure you check back again next week.

What is a credit score and who gives it to you?

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There are three major credit bureaus, Experian, Trans Union and Equifax. They know more about you than a possessive ex-spouse: where you lived 10 years ago, how much you owe in student loans, and even that you bounced that check (or two or three) in college. They give credit scores, which range from 501 – 990 under the new VantageScore system. The score is somewhat consistent across agencies, but not all of them have the same information about your credit history.

Is my credit report always going to be correct? How can I check?

There are many ways to get a credit report. Under the Fair Credit Reporting Act, you are entitled, as an American citizen, to one free credit report each year. I recommend getting one at least every 3 – 6 months, so you can make sure nothing is out of whack. Another way to get a credit report is through, which has an option that allows you to get reports from all 3 bureaus at once. Don’t waste any money on all the Suzie Orman extras that they sell, just send an email to me. I’ve taught thousands of Suzie Orman types over the years, so you can get your advice first hand.

If you buy the report outright, it’s going to cost you about $8. Under the law, if you are denied credit for any reason, you can request a free copy of your report. Also, any company that denies you credit has to explain why. Send a copy of the rejection letter to the credit bureaus and they will promptly send you a report.

If you believe there is an error on your credit report, you do have recourse. The Free Credit Reporting Act allows you to force the credit bureau to explain everything on your report that you call into question. In fact, there is a legal time limit to how long they can take getting back to you. If you are not sure about an item on your report, draft a letter to the bureau challenging the item. They will then reach out to the company to determine the validity of the item. Should the company not respond or be unable to validate the item, it will be removed. The removal of negative items should have a positive impact on your credit.

Next time, we will talk about the factors that go into the calculation of your credit score. Until then, let this information sink in and get your mind prepared for the idea of improving your credit life and taking control of your financial future. Remember: it’s not about where you are, it’s about where you’re going.

(Dr. Boyce Watkins is a finance professor at Syracuse University. He makes regular appearances in national media, including CNN, FOX and BET. He is also the author of Financial Lovemaking 101: Merging assets with your partner in ways that feel good. His column is published here every Friday exclusively on Redding News Review. You can reach Dr. Watkins by going to

Read more of Watkins' columns

Watkins: Four Bad Questions to ask a Financial Expert - Part II

Four Really Bad Questions to ask a Financial Expert - Part I

Boyce Watkins: What is FIV?
The Low-Down Dirty on Managing Money

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