I have some news for you, dear readers.  I, who have never held any type of debt outside a car loan that I always paid on time and paid off early, now have debt.  Credit card debt to be specific.

The husband was carrying a little bit of it, and had a pay off plan.  We read all the fine print that comes along with these types of things, but we misunderstood it.  And his 0% interest period ended abruptly.  Abruptly, at least, to us.  But I have a card that I use for rewards that still had time for a 0% interest balance transfer, and the expiration of 0 interest doesn’t expire until after the pay off plan’s end date.

So we transferred.  We’ve been trying to keep a general idea of our credit scores as we’d like to buy a house sometime in the future.  The last time I checked mine it was in the high 700s.

But now I have debt.  We’ve been monitoring our scores with a free system that estimates your number.  The husband’s shot up when we made the transfer.  Mine stayed essentially the same.

But those estimates aren’t the real thing.  Those estimates aren’t what the banks look at when you come to them asking for a loan for things like a mortgage.  What the banks look at are your FICO® Scores.

So when myFICO invited me to be a part of #myFICOIndsider, I of course jumped on the opportunity.  They offer a bunch of products that can either straight up show you your FICO® Scores or even monitor them.

Want to guess what happened when I checked my real, legit score using myFICO?  It wasn’t pretty.  It had dropped over 100 points.  I used a calculator, and figured out that if I were taking out a loan for a $150,000 home after the down payment, with a 30 year fixed mortgage, the drop in my score means I would be paying $33,022 more. If that’s not enough to motivate you to check your score before applying, I don’t know what is.  $33,022.

My guess as to why my score dropped is because my debt to credit ratio shot through the roof when I took on the husband’s debt.  I’m pretty sure this is what happened because when I made a pretty major payment, myFICO’s monitoring service sent me an email notifying me of a change in my debt balance.  I immediately checked my score, and it had inched up.  I imagine the monitoring could come in handy if someone was messing around with your identity, too.  If your debt balance suddenly shot up and you hadn’t swiped any plastic in a while, that notification email  would be so important.

The lessons I’ve taken out of this are:

1. Debt is bad.  (Who are we kidding?  All of us here know that.  But this was my first personal experience with the negative ramifications.)

2. Don’t apply for a loan until you know what your FICO® Scores are.  If they’re lower than you expected, it would be worth it to raise them before you even walked into that bank to apply.  Worth it like $33,022 worth it.

3. Monitoring your FICO® Scores is a good idea, too.  It will encourage you when you’re taking positive strides in your finances, and alert you to any suspicious activity.

And for all my friends that blog about debt, I know you’re salivating for numbers.  I hope you can be sated with percentages.  Since I took on the debt, which has not been very long at all, 17% has been paid off, with another 8% coming off later this month.  The other 75% has to come off in the next five months, but I’m more than confident we’ll hit that before target. And when we do, we’ll have to check myFICO again to see if I’d be in a better state to apply for that mortgage.  Though the house fund will have to be looked over, too. 😉

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