I often warn consumers about the little things that can have a big impact on their credit score. Today, I'm in more of a “don't sweat the small stuff” kind of a mood.
It is apparent that some people take this credit reporting stuff very seriously. In fact, one consumer recently took time out of his busy schedule to write to my advice column asking why, despite his many efforts, he couldn't get his score above 812. Apparently, people have a thing about being “graded.”
It is true that your credit score can have a big impact on your financial life; however, it is important to keep these things in perspective. Good people sometimes have bad credit scores. Besides, no one's obituary should ever read: “Stan was well respected by all three major credit bureaus.”
So, when does a credit score matter? Your credit history matters most when you are trying to obtain credit. If your credit report shows that you are not particularly creditworthy, you may be denied credit. Or, if you do obtain credit, it will be costly.
Credit reports might also matter when renting an apartment, obtaining insurance or securing some types of employment. Other than that, they don't count for much. In other words, there must be a permissible purpose for someone to view your report. For your protection, you are entitled by law to know who has received a copy of your report or inquired about it.
If your current credit score is negatively impacting your self-esteem, rest assured that time will help. The Fair Credit Reporting Act states the longest any derogatory information can remain on your credit bureau file is seven years from the beginning of the delinquency that led to the account being placed for collection, or seven years from the date of last activity on the account. Of course, you must start to pay your obligations on-time and as-agreed. It also helps if you don't take on too much debt or open too many accounts.