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Pay and Benefits

Do You Know Your Credit Score?

Breaking down the facts behind the numbers

Credit score. It's a number that can be as haunting as it is helpful to know, and whether you know it or not, it can determine the course of your financial destiny.

So what's the big idea with the credit score?

According to William Morrison, a financial educator at The Fleet and Family Support Center, Naval Support Activity Annapolis and the U.S. Naval Academy, your credit score is actually a huge deal.

"Credit score is a generally numerical amount between 350 and 850. The higher the better," said Morrison. "It's basically a number that measures your risk as a borrower; how likely it is that you'll pay your debt."

The way a credit score affects an individual directly is best demonstrated with interest rates. Morrison said that folks with bad credit end up paying more for things than people with good credit because they'll often pay more in interest.

What other damage can a bad credit score do?

A negative credit score can also hurt your career said Morrison.

"61 percent of security clearances that are pulled are due to financial reasons," Morrison continued. "Those people might lose choice assignments."

How can I fix my credit?

1. Find out what your credit score is.

"myFICO is the collector that came up with this kind of patented system as far as determining a score and each...agency maintains its own algorithm in saying the probability of being paid back," said Morrison. "Equifax, Transunion and Experian are those that do the credit reports and the credit scores."

2. Clear up discrepancies.

"If there's data on there that is not yours, there are set procedures through each reporting agency that you can say, 'Take it off, it's not me'."

Also make sure that information that is favorable appears on your record.
"They might not be reporting a credit card that you've had and always been paying on time," Morrison continues. "Those usually change scores."

3. Pay your bills on time.

Morrison said to make sure you're not exceeding your credit limit.

"See how much of your credit, the aggregate amount, that you're using." He also mentioned that one really quick and easy way to improve your credit score is to your aggregate limit. This can often be done online or over the phone in a matter of minutes. It works by expanding your available credit, but it's only effective in improving your credit score if you don't use that expanded credit.

Morrison emphasized using credit responsibly to maintain overall good financial health.

"Do some planning, because these are skills you're going to need for the rest of your life whether you're in the Navy or not," he said. "Even with the credit card is going to start setting the bar with your credit score as to how lenders see you."

For more information on how to keep your financial situation in check, visit your Fleet and Family Support Center.