John Puthoff thought he'd check his credit score before applying for a loan to buy a new home.
"I am getting ready to buy a house, selling mine, and wanted to see where my score was at," Puthoff said.
But he was stunned. First, because the three credit bureaus all charge a fee, and second because they all have different scores.
"I got a score from on bureau which was higher than the 850 which is the max, so I ended up confused."
Figuring out the" hows" and "whys" of your score is confusing. And figuring out why yours just dropped 50 points can be almost impossible.
The one certain thing is that a bad score will cost you money next time you need a loan.
One woman said "it was easy to find it. As far as finding out why my score is what it is, that was difficult." Another man told us "I think they should make it easier to look up without difficulty."
Veteran credit counselor Mary Hurlbert says your FICO score is the most important one : It ranges from 300 to 850.
- 750: Hurlbert says you ideally want it over 750 for the best rates. At 800, you have "excellent" credit and should have no problems.
- 725: Below 725, she says, you won't get a zero percent car loan, or that low 4 percent home mortgage rate you see. You will have to pay more, because you don't have top credit.
- 600:Below 600, you may not qualify for a standard rate. You could end up paying hundreds of dollars a month more for a mortgage than your neighbor with the same house.
But Hurlbert says many people lower their score by making some simple mistakes.
The top credit score killers:
1. Late bills, even just one late credit card payment.
"Thirty five percent of your score is how you pay your bill," Hurlbert said. "So for Pete's sake, pay every single bill on time.""
2. Using more than one third of your available credit.
Hurlbert explained "if you have a credit card with a $6,000 limit, don't charge any more than $2,000."
3. Too many credit cards
But having too many cards will also hurt your score, especially if you have more than a half dozen store cards.
"Don't open a credit card every time you go shopping because you're going to get 20% off. That's going to lower your score," Hurlbert said.
4. Canceling too many cards
But the opposite is also true: Canceling several cards at once hurts your score. Hurlbert says cancel one this year, then a second next year, if you are trying to cut back. You don't want a sharp reduction in available credit.
5. Letting anything go to collections.
Hurlbert warns that letting any bill go to collections --even a disputed doctors bill --will kill your score. "Just don't let it go to collections, period," she said.
If you have to, pay half the disputed medical bill, just to keep it from going to a debt collector. Then fight it.
If you have poor credit, Hurlbert says you can't fix it in a few weeks, despite what websites claim. She says it takes 2 - 4 years of paying bills on time, and paying down your credit cards.
How to Learn Your Score
Want to know your score? Each of the 3 big credit bureaus, Experian, Equifax, and TransUnion, offer scores. They charge between $7 and $10.
However, as Puthoff discovered, they are all different, and are not as popular with lenders as the Fair Isaac FICO score.
For a free estimate of your credit score, check www.Credit Karma.com . There are no fees or obligations to buy anything.
Your true FICO score will cost about $10: You can access it at www.MyFICO.com. (The site may say "free," but it's not really free. With the "free" program, You have to cancel right after you get your score, or you will be charged monthly fees.)
John Puthoff just wishes it were a lot easier."I don't understand why they don't have just one score across the board that everybody uses," he said.
The bottom line: If you pay your bills on time, check your credit report every year for errors, and don't mix out your credit cards, you should have a good score.
And that way you don't waste your money.