We at Family Wealth Decisions Group are a wealth advisory firm, and technically cybersecurity may not fall strictly under the purview of wealth advisory. However, our mission is to have a significant positive impact on the lives of our clients by helping them to achieve all that is important to them and helping them to reduce the risk of bad things happening along the way.

In that respect, cybersecurity is most definitely something that should be discussed, and often at that. Cyber threats can significantly impact everything we try to help our clients achieve.

 Among the most common bits of advice we like to offer our clients is to get a copy of their credit report for free once a year at www.annualcreditreport.com, to which we often get a response somewhere along the lines of: “My credit is good. It’s 754.”

While that number is important to know, it is however not your credit report. That number is your credit score.

The difference between your credit score and your credit report is much like the difference between your account balance and your transaction history. While it’s good to know you have money in the bank or a good credit score, it’s equally important to know how it’s being utilized, and who is utilizing it. 

Credit Score

Your credit score is a numerical representation (and summarization) of your credit reports. Ranging from 300 to 850, it is compromised of the following factors[i]:

• Payment History
• Amounts Owed
• Length of Credit History
• New Credit
• Credit Mix

These factors can be weighted differently depending on the reporting agency, and so it is possible to have more than one credit score. Lenders and credit card companies may check any one of the many available credit scores, however FICO credit scores are among the most commonly used[ii]. There are many different credit scores: some from each of the three credit reporting companies[iii], and many different FICO composite scores – some for auto loans, another for credit cards, etc.[iv] Some scoring methods even exceed the 350-800 range going as low as 250 and as high as 900[v].

However, maintaining a good credit score doesn’t have to be hard.

• You should try to pay your bills on time and avoid late payments or carrying over balances[vi].
• While it’s important to use your credit, keeping your utilization at 30% or below can help you maintain a good credit score, or help to improve a less than stellar one[vii].
• Try to avoid accessing multiple lines of credit at once, either by taking out multiple loans or opening new credit cards[viii].
• Keep old credit cards open even if you are not using them frequently as they can improve your credit history as long as they are kept in good standing[ix].
• And lastly… Monitor your credit reports[x].

Credit Reports

Your credit report, or rather reports, provide a detailed history of your credit use. There are three reports that you should be checking when you review your credit reports and they are generated by Equifax, Experian and TransUnion. While you can request copies of your credit reports from all three credit bureaus separately, you can also request all three at www.annualcreditreport.com for free every twelve months.

Just like your credit score, prospective lenders will likely request copies of one or more of your credit reports to determine your eligibility to receive credit. More than that, insurers, landlords and prospective employers may also request copies of your credit reports as an indication of your dependability[xi]. Your credit reports will contain detailed information on[xii]:

• Your total outstanding debt
• Your history of securing and paying off debts
• Your history of making monthly payments, and whether any were late or missed altogether
• Bankruptcies
• Charge-offs
• Foreclosures

However, it is important to note that there can be mistakes in your credit reports. A business doesn’t necessarily have to report to any, or all of the bureaus, and sometimes a lender may make a mistake in reporting information[xiii]. Not all discrepancies in credit reporting are as innocent as clerical errors though, and sometimes it may be the result of something more insidious. Monitoring your credit report can help you root out fraud before it starts affecting your credit score. Combined with freezing your credit reports at all three credit bureaus these steps can help you regain control over who has access to your credit. 

For more information about how you can improve your cybersecurity please check out our online seminar ’30 Minutes to Savvy Cybersecurity,’ or contact us. Remember, we are here to help.

CRN-3504628-032321

[i]https://www.bankrate.com/finance/credit-cards/what-is-a-credit-score/

[ii] ibid

[iii] idid

[iv]https://www.nerdwallet.com/article/finance/credit-score-vs-credit-report-whats-difference

[v]https://www.investopedia.com/articles/personal-finance/080615/highest-credit-score-it-possible-get-it.asp

[vi]https://www.bankrate.com/finance/credit-cards/what-is-a-credit-score/

[vii] ibid

[viii] ibid

[ix] ibid

[x] ibid

[xi]https://www.bankrate.com/finance/credit-cards/credit-score-vs-credit-report-whats-what/

[xii]https://www.experian.com/blogs/ask-experian/does -a-credit-report-show-credit-score/

[xiii]https://www.investopedia.com/articles/personal-finance/080615/credit-score-vs-credit-report-which-one-better.asp