Are you looking to buy a house ? What about a car? If so then you will need to find out what your credit score is. It could save, or cost, you thousands of dollars.
What Are The Scores
Our credit score basically quantifies your default risk to creditors. The higher the number the lower your default risk. It helps decide what type of credit is available to you, how much interest you will pay and other options such as utilities and mobile phone purchases. The scores range from 300-850.
579 and lower: This is a poor FICO Score and is considered to be poor credit. You may be rejected for credit and may require a fee or a deposit to obtain a credit card. Utilities may also require a deposit. A credit score this low could be a result from bankruptcy or other major credit problems. About 61% of consumers with a credit score under 579 are likely to become seriously delinquent in the future.
580-699: Indicates a fair FICO Score and is below the average credit score. You are considered subprime borrowers and getting credit may be difficult and will include high interest rates. Approximately 28% of consumers with a credit score between 580 to 669 are likely to become seriously delinquent in the future.
670-739: Considered a good FICO Score and is in the median credit score range. These are known as “acceptable” borrowers. Generally 8% of consumers with a credit score between 670 to 739 are likely to become seriously delinquent in the future.
740-799: If you are in this range you have a very good FICO Score and is an above average credit score. You may qualify for better interest rates from lenders. Approximately 2% of consumers with a credit score between 740 to 799 are likely to become seriously delinquent in the future.
800 and above: You have an exceptional FICO Score and a well above the average credit score. You may experience an easy approval process when applying for new credit. Approximately 1% of consumers with a credit score of 800+ are likely to become seriously delinquent in the future.
How Credit Scores Are Calculated
35%: Payment history
30%: Amounts owed on credit and debt
15%: Length of credit history
10%: New credit
10%: Types of credit used
How Did I Improve The Score
I went from having a 625 credit score to an 800 score. It took me several years to get to above 750 but I’m happy with my progress. I started off by paying off my bills to a zero balance. There was a time when I did not pay off my bills every month. After I wisened up financially I vowed to never pay interest on credit cards or utility bills ever again. Review your credit report with a fine tooth comb. I was rarely late paying bills but for the past 13 years I have not been late or missed a payment.
Another trick is to increase your credit limit every couple of years. Increasing your available credit improves your credit score. But do not get an outrageous amount because that might not help that much. Other tips would be to setup Payment Reminders, use cash instead of credit cards and to contact your creditors if you are having a hard time paying off your balance.
How a Credit Score Effects Us
Loan applications get approved much quicker than ever before. The score can be delivered immediately. A mortgage used to take weeks to get approval and now it only takes hours. Credit scoring is fair and does not take into account race, gender, nationality or religion. It only looks at risk.
If you have had poor credit in the past, this may not haunt you forever. Credit problems get fixed over time and as recent good payment patterns show up on your credit report. Credit scoring takes into account all of the good and bad credit-related information.
Lenders who use credit scoring approve more loans, because credit scoring gives them more precise information to base credit decisions. With more credit available, the cost of credit for borrowers decreases. Automated credit processes, including credit scoring, make the credit granting process more efficient and less costly for lenders, who in turn have passed savings on to their customers. And by controlling credit losses using scoring, lenders can make rates lower overall.
Where To Go
I use Transunion to track my credit report. But there are other options as well. In addition, I noticed that my credit card companies started giving me my credit score within the past year. So there is no excuse for me not to track going forward.
Do you know your credit score? How did you improve it?
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MDD Hosting – I am big proponent of using MDD Hosting as my website server. Their tech support is helpful, especially if you are a newbie to website building. I could not be happier with their service and so will you.
StudioPress – I bought the Going Green theme from this site because I loved the layout and colorization. It is advertised for Environmentalist organizations but I loved it because it’s the color of money. There are many other Themes to choose from, so take a tour and see if any of them can help you with your site.