Transcripts

"Money File"-What's The Real Credit Score?

SUSIE GHARIB: In the "money file" tonight, do you really need to know your credit score? Here with some answers, Chuck Jaffe, senior columnist at Marketwatch.

CHUCK JAFFE, SENIOR COLUMNIST, MARKETWATCH: You can't watch television these days without seeing commercials about the importance of getting your credit report or knowing your credit score. For credit reports, those ads are selling something consumers can otherwise get for free. For credit scores, there's a sure-fire test for determining if you need to look at and improve your number.

By law, the three big credit bureaus must give you a free copy of your credit report each year. The official site for requesting your copy is www.annualcreditreport.com. According to a recent study by "Consumer Reports" web watch, any other site that's promising free reports is trying to sell you other services that you probably don't need. One thing they may try to sell you is your credit score. A new study from the Consumer Federation of America makes it clear that consumers don't know enough about their score or how it works. On an everyday basis, knowing your credit score is not all that important. But on those days when you might need credit or you are preparing to take out a new loan, your credit score becomes crucial.

The best scores get the best deals; paying bills on time, cutting debt and staying away from credit limits not only raises your score, it significantly lowers your payments. So if you wonder whether to pay to see your credit score, look at the credit terms you've got today. If you can't get the best rates available, there's room for improvement in your score. That's a sure sign that you are the consumer who could benefit from knowing and paying for your score. I'm Chuck Jaffe.