So what’s your credit score and what does it mean?
Hopefully it corresponds with the JAL airline type I took from San Diego to Tokyo using points.
As a rule of thumb a credit score of 730 from all 3 bureaus is needed before you begin the points game. If you are short of this threshold then I would focus on reviewing my credit reports to find out why your credit scores are low. Do you have derogatory marks e.g., accounts in collections, late payments etc? Is your debt to credit limit very high. I already discussed in Step 1 that those who have credit card debt should also not enter the arena of points. If not then the Dreamliner of flying around the world for pennies on the dollar is well within your grasp.
What is a FICO score? Honestly, nobody really knows. It is a mythical number that somehow tells lenders if you are credit worthy. Here is the actual breakdown of how it is determined, sorry if it bores you.
Basically, if you do not have derogatory marks, and you do not have a lot of debt you should have a high credit score. (A more technical explanation can be found by going to the FICO website.) I say should because a recent 60 Minutes story revealed that millions of Americans have errors on their credit reports and that some lending agencies use different metrics to gauge your creditworthiness beyond your personal FICO score.
Assuming you have cleared all hurdles up to this point regarding your credit score, there is one more question I must ask before you find yourself staying at the top floor of the Conrad Tokyo.
Are you planning on buying a house within the next two years?
If the answer is maybe, then count yourself out of the points game yet again. Having a few points to go travelling is not worth a higher interest rate on a mortgage. Let’s try to keep things in perspective. The reason, per the graph above, inquiries on your credit report lower your credit score. It tells lenders that you are borrowing and increases your rate of default. Inquiries last on your credit report for two years so those looking to buy a house should have as few inquiries as possible (unless you are buying that house for straight cash!)
So who’s left standing? Those of you who are and be honest with yourself because I will not be held responsible for your irresponsibility can enter the fun world of churning points.