What is my credit rating? Why is it so important?
If you're like most of us, you probably do not even think about your credit rating until it time to apply for a credit card, mortgage or car loan. A little known fact is that people with a "good" or "excellent" credit rating can pay a much lower interest rate when they lend money to. This wonderful news to savings to you of hundreds or even mean thousands of dollars over the life of a loan. Why do banksand credit unions to give a preferential treatment if you have a good credit rating? Because you have proven that you are trustworthy in handling money, you pay your bills on time and are for repaying your loans.
What is a credit report, and how can I get one?
A credit report is a list of how much credit (money in the bank, equity in your house) and how much debt (unpaid credit card balance, car loan, unpaid mortgage balance) you have andRecord how well you pay your bills on time. Thanks to the new can come into force Fair and Accurate Credit Transactions (FACT) Act, you will receive a FREE credit report a year from each of the 3 major credit bureaus. You can contact Equifax at http://www.equifax.com or 800-685-111. You may contact Experian at http://www.experian.com or 888-397-3742. Or you can contact TransUnion at http://www.transunion.com or 800-916-8800.
What's my FICO score?
Thefirst step towards improving your credit rating is to know what your FICO (Fair, Isaac; name for the company that it is created) score. Their numbers are FICO your lender how likely you are to repay your loan on time. Your FICO score can be specified from 300 to 850, the higher the value, the better. Your FICO score is not listed on the free credit report, but may require any of the 3 major credit bureaus listed above, are bought for theless than $ 10. Is knowing your FICO score, worth $ 10? Absolutely. Or if you recently requested a loan, your lender may be able to tell you what will your guests.
What practical difference does it really make my FICO score?
Let's assume that you have found your dream house and go apply for a mortgage. If you have an 'ok' FICO score of 620 to get you for an interest rate of 7.5%. Well, if you have a"excellent" FICO score of 775, you can qualify for a lower interest rate of 5.9%. Big deal you say? What if I told you that you could save over $ 3500 per year (per year!) For a 30 years fixed rate for a loan for $ 220,000. That's a big deal! The average FICO score is 723rd You want to sell have to aim to be even bigger than that and begin to save money on every loan you have.
Ok, I got my credit report, now what?
Go over your credit cardReport with a fine lens on the lookout for mistakes and inaccuracies. It may surprise you to eliminate credit on your report that you will find it listed no longer use, wrongfully reported late payments or credit cards listed, that you never even applied for. In my next lesson we discuss what to do if your FICO score is less than it might be and how mistakes and inaccuracies in order to repair your credit report.
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