Credit Chameleon

On the recommendation of a friend, I decided to check out Credit Karma, an online service that allows you to see your TransUnion credit score (not the same as your FICO score) for free. In addition, you also have the opportunity to see your credit report card so you know what areas you to improve on. I was a bit hesitant to utilize the site, as giving out personal info to unverified, third party companies isn't something I'm usually comfortable with. I familiarized myself with their privacy policy and used Internet Explorer's "In Private" browsing feature which restricts cookies. I was relieved they did not ask for my whole SSN, just the last four digits. Here's how I faired:

Credit Report Card: C (ouch! definitely thought I'd do better than that!)

 Open Credit Card Utilization - C - my utilization ratio (balances divided by credit limits) was 43%

Percentage of On-Time Payments - A - 100% !

Average Age of Open Credit Lines - D - my average is a little less than 4 years, with the oldest credit line being 7 years.

Total Accounts - B - 21 (14 active, 7 closed)

Hard Credit Inquiries - C - 3 in the past two years (most likely all from buying the house last year)

Derogatory Marks - 0

Total Debt: $175,557 (79% mortgage, 16% student loans, 5% credit cards)

Debt to Income Utilization - 62% (just me, hubs' salary not included)

Credit Score: 686 (double ouch)

That score represents an almost 80 point drop from where I was at this time last year. I believe when we started prepping to buy our home, my score was in the 740-750 range. This was the initial kick in the pants I needed to reign in my spending and reverse the downward trend. Checking back in is definitely the boost of motivation I need to keep up the plan.

There's not much I can do about the "length of time" my accounts have been open, save for not opening any new accounts. I'll have to keep watch over the accounts I do have to make sure I'm not charged any kind of inactivity fees - or worse - have cards closed for inactivity. According C.K. accounts open for 8 years or more is what I'm aiming for. Additionally, with the passage of time, the "hard inquiries" on my credit report will disappear as well.

The big area to work on is my utilization ratio. The sweet spot is 20% or less. Now that I have a plan, that number will, hopefully, be achievable in the near future.

What was really cool on the website was the Credit Simulator - Essentially, you can plug in different scenarios and see how it reflects your credit score. For example, if I pay off my credit card debt, my score would rise to 755. If I obtain an auto loan for $12,000, my score drops three points. If I do both those things, my score still rises to 729. Pretty cool.

Has anyone else used Credit Karma (or a similar website)? Raise your hand if you'll have Karma Chameleon stuck in your head the rest of the day. Yep, me too.

Day Twenty Five Spent:
$1.00 vending machine chips
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Day Twenty Five Saved: $0.00