First and foremost, you want to protect your credit.  This is the foundation of all lending and is the only way for lenders to judge your creditworthiness for the future.  If you always pay your bills on time and have never declared bankruptcy, chances are you will have good credit.  But if you are the opposite, and your credit score is too low, you may find it very difficult to get future credit.  Your credit bureau score can range from 300 to 900.  As a general guideline, Banks and A-Lenders are looking for clients with scores above 680 and will generally automatically decline applications with scores under 600.  Credit card companies are a little more lenient and will go down as low as 530, with auto declines for scores under 500.

If you have a score of less than 500 this will mean that you either have no credit history or you may have a delinquent or fraudulent record.  You always want to check your score every year to ensure you keep your FICO rating above 600.

Christine’s Tip:

Most people don’t realize that car leases can quickly drop your credit score (without you ever knowing it).  When your sales rep calls you to upgrade your lease to get you into a new vehicle for the same monthly payment – many people think this is a great deal – and it may be.  The problem is that the old car lease, because it has not been officially paid out and closed but rather transferred to a new lease and a new vehicle, the old lease stays on your credit.  So now it looks like you have two car leases when you really only have one.

 I once pulled a credit bureau for a client that was getting a collateral charge at a major bank and he was turned down repeatedly due to this problem.  You see, the client had upgraded his vehicle many times and it looked like he had four car leases when he really only had one.  Of course, we fixed the problem by going back to the car dealer and having them close the leases properly, but for many people, they don’t even know this is happening to their credit.  Checking your credit report once a year is always recommended.