I do not know a single thing about credit scores.

Factual Questions
1

So I’ll ask you cats.

I do not have a credit score. To build a little bit of credit, I took out a small loan of $600 in September. I’m planning on moving in January and do not want to have to worry about loan payments while getting settled in, so I made several early payments, and now I have the loan almost completely paid off. I don’t need to make another payment until the end of May.

I know that it’s better for my score to keep a loan alive than to pay it off quickly, but will it still help my credit score to sit on this until my final payment is due? If my credit history is checked next summer, will it say “November: paid, December: paid, January: paid” or will it say “this guy made a bunch of payments in October and then one in May?” I’ve gotten mixed answers to that question.

I have of course spoken to a couple people at my bank about this, but they were pretty confusing with their answers and mostly just wanted me to take out more loans, which obviously left me suspicious. I appreciate anything you guys can share.

2

Credit reports don’t go into that much detail. Nobody except the people that build the models know exactly how they work but don’t worry too much about that. The credit agencies generally only care about true credit. They don’t usually care anything about utility bills for example unless they go into collections much later. They also don’t care about income or any bill that you pay within 30 days after it is due. You can pay all of your bills 20 days late and still have great credit for example.

There aren’t too many other tricks other than responsible spending and payback. You do need credit accounts though to establish credit. Get one credit card and pay most of it back every month maybe letting a small amount revolve. It won’t cost much to do that if you look around. Car loans and mortgages also help establish credit. Some people get obsessed with credit scores which is pointless. Good enough is simply good enough. Just build a responsible financial plan that you can maintain for life and you will never have any problems.

3

Here’s some general info on credit scores: www.fico.ca

I believe as long as no payments are made late, the longer you keep your account alive, the higher your score.

4

You do. Just likely not much of one.

First- a lot of dudes get “credit report” and “credit score” mixed up. Unless you are going for a Mortgage, your credit report is more important.

Here’s a wiki link:

Now, go to annualcreditreport.com (not freecreditreport), and order one or two of your free credit reports. Look them over. Dispute anything that is wrong or is derogatory and very old.

Here’s a wiki cite that explains credit scores in the USA and also talks about credit reports.

5

By law, you are entitled to a free credit report once a year from each of the three credit reporting agencies.

When you go to the official reporting web site ( Annual Credit Report.com - Home Page - there are no other free substitutes! ) you do not have to order your free report from each agency all at once. Instead, order one free report from one credit agency now. Four months from now, do it again with the second credit reporting agency, Four months later do it a third time with the last credit reporting agency. If you get into the habit of doing this stagger approach, you will have a current report every four months for free, forever. Be aware that the three credit bureaus may use different criteria so your credit score may vary among the three.

Of course, if you are buying a house, a car, any big purchase, you best bet is go to http://www.myfico.com/ and buy a once-off complete package of your FICO score and three credit reports.