I’m on my way to the airport to go visit Girl Ninja in San Diego, which means I’ve got a guest post for ya today. I’ll be back and in action next week. Enjoy your weekend suckers. I know I will

Hi, I’m Ed and I’d like to punch TWO people in the face with one swing. Just line them up (if they were still alive), and beat some sense into them. I’m referring to the two gentlemen behind the idea of the credit score, Bill Fair and Earl Isaac, collectively known as the Fair Isaac Corporation (FICO), where your credit score originates. These guys purposely sold Americans to the mercy of financial institutions and unless you’re a multi-millionaire that can pay cash for everything, you’re going to have to participate in their insidious game.

FICO was founded in 1956 by a couple of mafia godfather wannabes that were unwilling to be fully transparent in their methodology. It’s not that I necessarily disagree with the ideas of checking a person’s credit history before loaning to them, but more that these scores are based on a fairly secretive formula.

Your credit score is a three digit number ranging from 300-850 that serves as a numerical representation of your credit risk and trustworthiness. If you’ve ever been late on a credit card payment by more than 30 days or applied for “too many” credit cards at once (how many is too many? Your guess is as good as mine!), your score most likely took a hit. Luckily, there are aggressive and passive strategies one can implement to work their score back to a preferable number.

These days, you can’t secure a loan, let alone an apartment without a good credit score. And what’s worse, is the standards of what’s considered “good” are constantly changing. For instance, before the Financial Crisis of 2008, a score of 680 was good enough to get you great rates on credit cards, installment loans and mortgages. These days, lenders are looking for 730 or better to give out the best interest rates. They keep pushing it higher and higher and soon enough, I’m sure you won’t be able to purchase a home without a 95% down payment.

So in short, we are all subjected to this game of cat and mouse because two guys who thought it would be cute to enslave the Western world to a seemingly ambiguous system. We’re all tools getting screwed and abused. So if you’re ever turned down for a credit card, a rental lease or an auto loan, just know that there’s someone in your corner yearning for an after-fight suckerpunch.
Bill Fair and Earl Isaac: I’m calling you out from your graves — Bring it on, ladies.

Ed O’Brien is a writer on personal finance, specializing in credit repair. You can find more of his articles located at CreditRepair.org.

Since yesterday’s post focused on credit, I figured it was only appropriate to continue on that same theme today. Specifically, in regards to purchasing a home. A handful of commenters yesterday indicated that Girl Ninja and I should just ditch the plastic all together. Dave Ramsey says those keep who credit cards are “Worshiping the almighty FICO.”

Should GN and I swear off credit cards for life?  I vote no. In fact, I vote HECK NO! Do I wish we lived in a world were credit scores weren’t so darn important? Heck yes I do! But the world I live in, has determined credit scores are a very important part of determining one’s financial solvency.

When it comes time to purchase a home, Girl Ninja and I plan to follow the path of 99.9% of Americans and take out a mortgage. If you plan on paying cash, this blog post likely wont apply to you. It’s my understanding that the primary things a lender takes in to consideration when you apply for a mortgage are; A) how much you make, B) how much other debt you have, and C) your credit history/score.

If you have no credit history, or do things that could damage your credit history (like closing your oldest credit card accounts) then your FICO score will suffer. The lower your FICO score, the less inclined the bank will be to loan you money. Or at the very least, they will charge you a higher interest rate, since they perceive low FICO scores as “riskier” loans. Love it or Hate it, that’s the way it is.

Some will argue (as one did in yesterday’s post) “If you are worried about a Mortgage in the future, there are lenders who look at a lot more than your credit history!!” It’s true. There ARE lenders that will manually underwrite a loan for you. They’ll look at more than just your credit score (things like investments, savings, disposable income, etc). Unfortunately, manual underwriting is no longer the standard.

I want to get the best possible mortgage terms possible when it comes to owning a home. This means, I want as many banks as possible competing for my business. The number of banks that manually underwrite loans is SIGNIFICANTLY fewer than those that don’t. If I ignore my credit score, then I am forced into exploring mortgage options with a very small niche of lenders. The chances of me getting a ridiculously low interest rate decrease as I no longer have 50 different companies competing for my business.

Did know what the difference is between a 4.75% and a 6% interest rate on a $200,000 mortgage over 30 years? The person that takes the 6% loan will pay $55,000 more in interest! I gotta do what’s best for mine and GN’s financial situation, and unfortunately in this messed up world, that means keeping our credit score as high as possible (without borrowing money) so we can get the lowest interest rate possible.

What say you readers? Do you care about your credit score? When you bought your home, was your credit score a BIG piece in determining the lenders’ rates? Does my acceptance of current financial practices mean I worship at the alter of the almighty FICO?

p.s. Who knows what movie my stick figure drawing quote is from? No cheating.

Girl Ninja and I have quite the predicament on our hands. When we got married we decided we would combine our financial lives. So far it’s been a relatively smooth process. That is, until recently.

Prior to getting hitched, Girl Ninja and I both had separate Alaska Airlines Credit Cards. The card has some pretty awesome benefits including; guest passes to Alaska VIP room, $99 companion ticket, one mile for every dollar spent, and triple miles for airline purchases. When you use your credit card as much as we do (remember $4,000 charged to it this month), we can rack up some pretty serious miles. These perks don’t come free though. The annual fee for the card is $75. Ouch.

Alright so here’s the problem. When Girl Ninja and I combined our finances, we didn’t really (and still don’t) know how to combine our credit. Neither of us want to give up all of that glorious credit history on our cards (six years for her and four years for me). I talked with Bank of America to see if we could somehow just transfer our credit cards to a new joint credit account, but was told that wasn’t possible. Am I the only person that thinks it’s stupid BoA wont just transfer one account history to a new account? I mean, it’s not like we are switching banks or anything!? I digress.

I was able to add GN as an authorized user to my CC account, so we are currently just using the card that’s in my name, while her card sits in a drawer in our office. That’s pretty stupid when you think about it though. We are essentially paying $75/yr to keep her credit history.

And thus the dilemma. Is $75/yr worth five years of credit history? Should we close the account and just leave her as an authorized user on mine. Should I close mine and go as an authorized user on hers? Should we close both of ours and find a rewards card with no annual fee? If we had just one card (meaning one $75/yr fee), we totally spend enough to justify paying the fee. But we definitely don’t receive double benefits for keeping two separate accounts.

Do you have a rewards card that has an annual fee? How do you justify paying it? Would you keep paying $75/yr on her dormant card just to keep her credit history?

p.s. Did you notice I added a Facebook “like” button at the end of each of my posts. You better start “liking” my stuff! If you don’t I’ll be forced to punch a baby walrus in the face!

**UPDATE** Faithful reader, SS4BC offered up a great solution to my predicament in the comments. You can see it by clicking here, or scrolling down and reading ‘em.

Seeing that I still haven’t fully adjusted to the eight hour time change here in Germany, I’ll be keeping things simple today. Let’s play a fun game called “What’s your current credit card(s) balance?”. I’ll go first.

Girl Ninja and I have one credit card with a balance on it. I just logged in an almost soiled myself at the sight of the ungodly high balance. Especially when you consider the fact we pay it off in full each month. Are you ready for this…

$4,311

Man oh man, is it gonna suck making that payment. Here are some of the larger purchases included in that balance…

• Girl Ninja’s Plane Ticket to Germany: $811 (p.s. I can’t wait for her to come visit)
• Budget rental truck/tow dolly for move: $964
• Gas for rental truck: $560 (my $760 guess was way over…thank goodness)

And then there are just a crap-ton of random miscellaneous charges between $10 and $100 dollars. I’m definitely not looking forward to April 1st (the day my bill is due). Perhaps I should take up prostitution as a side job while I’m here in Germany since it’s legal and all? Something tells me Girl Ninja wouldn’t like that too much.

Alright, creepy blog stalker….What’s your credit card (or cards) balance? Will you be paying it off in full? Can anyone beat $4,311 in purchases last month?!

I’m sure you’re all familiar with that catchy little jingle. The one that goes, F-R-E-E that spells FREE, credit report dot com baby. I love the song (it’s catchy), but I hate the message. Personally I think freecreditreport.com deserves a swift backhand to the jugular. It infuriates me that the company markets itself as a free credit report service, when in fact it is a we-hope-you-don’t-realize-you-are-signing-up-for-a-monthly-subscription-service.

Yes, your initial report is free, but they charge the bajeezes out of ya 30 days later if you don’t cancel the contract you probably didn’t know you signed. Unfortunately, freecreditreport.coms  catchy tune has polluted the minds of millions of Americans and have become the industry standard.

Don’t worry though, there is a way to check your credit report, three times a year, for free. As in it ain’t gonna cost you a thing free. Annualcreditreport.com is THE ONLY legitimately free, no strings attached, way to check your credit report. No fishy business going on here (it’s endorsed by the federal government). All you do is punch in a little information and within a few minutes you have full access to your credit report. No contracts, no subscriptions, no sketchiness. Booya grandma!

So now that you know how to check your credit report, it’s important you understand WHY you should check it. I do so for one reason and one reason only; To make sure everything is a-okay. I can look back through all the credit accounts I’ve had, over the last seven years, and double check that everything was reported to the credit agencies properly. I checked yesterday and let me tell you, it felt great seeing Sallie Mae showing “Paid in full.”

Not only can you check on the accuracy of any information on your report (and dispute any inaccurate information), but it also serves as the best tool to help spot identity theft. All it takes to open an account is just a little bit of personal information. What if someone has opened an account in your name without you knowing? If everything looks familiar on your credit report, than you’re probably in the clear. If there are some random credit card accounts, held with companies you’ve never heard of, there’s a good chance you’re the newest victim of identity theft.

Keeping up with your credit report (even if you have no debt at all) is just as important as maintaining a budget. It’s one piece of the whole personal finance puzzle. A very important piece mind you. If you haven’t checked your credit report in the last six months, go do it now at annualcreditreport.com (and if you’re wondering if I was compensated for this post or sponsored by them in any capacity, I wasn’t. Although, if they offered me compensation I would gladly take it )

When’s the last time you checked your credit? Have you ever been fooled by a freecreditreport type company? Ever been the victim of identify theft? Was it as big of a headache as I imagine it would be?