Your Credit Score - Why You Should Care About It
Your credit score, composed of just a few measly numbers, hold such power over the financial future of your life.
A score at the lower end of the scale can cost you hundreds even thousands of dollars in interest costs over time.
A lender will most likely reject you for a loan because of a low score.
This number is so potent it can drastically influence your power to get a new credit card and mediate the best interest rate for a loan.
Your score even has the power to impact the premiums you pay for insurance and your ability to secure a job.
So how is this score calculated? The combination of numbers is determined by a mathematical calculation based on your credit history.
The appropriate numerical digits are assigned to your profile based on the information gathered from your credit report.
By extruding this information, they can estimate the probability of your financial behaviors in the future.
You'll be surprised to know there a literally hundreds of credit scores compiled in our country, but the standard for most lenders is the FICO score (Fair Isaac Corporation).
The FICO score has been the grandfather of all scores and ranges from 300 to 850.
With a higher score, you can qualify for better interest rates.
Statistics reveal more than 75% of mortgage companies and financial institutions depend on this score to evaluate potential borrowers.
A score of 700 is considered acceptable.
Scores below 650 will result in higher interest rate loans.
Banks depend on your score to figure out what the risks are of making you a loan.
If you're fortunate enough to have a high score, you'll be considered a good credit risk.
However if you have a dismal score, you'll be considered a poor risk for a loan with lenders offering you a higher interest rate loan.
Insurance companies also place great weight on your credit score when evaluating you for a policy.
Insurers believe there is a direct correlation between the quality of your score and the likelihood of you filing a claim.
Independent studies reveal the greater propensity for individuals with a low credit score to file a claim.
Therefore, expect your insurance premiums to be higher than someone who has a better score.
If you have a low score, it's never too late to start rebuilding it.
You can start by ordering a copy of your credit report from the three major bureaus (Equifax, Experian, and TransUnion) and verifying all the information is correct.
Any incorrect information should be disputed with the bureau.
Next you should start establishing a positive payment history by paying your bills on time.
If you don't have a credit card, you can get a secured card to help you establish credit.
Over time, you can increase your FICO score.
A score at the lower end of the scale can cost you hundreds even thousands of dollars in interest costs over time.
A lender will most likely reject you for a loan because of a low score.
This number is so potent it can drastically influence your power to get a new credit card and mediate the best interest rate for a loan.
Your score even has the power to impact the premiums you pay for insurance and your ability to secure a job.
So how is this score calculated? The combination of numbers is determined by a mathematical calculation based on your credit history.
The appropriate numerical digits are assigned to your profile based on the information gathered from your credit report.
By extruding this information, they can estimate the probability of your financial behaviors in the future.
You'll be surprised to know there a literally hundreds of credit scores compiled in our country, but the standard for most lenders is the FICO score (Fair Isaac Corporation).
The FICO score has been the grandfather of all scores and ranges from 300 to 850.
With a higher score, you can qualify for better interest rates.
Statistics reveal more than 75% of mortgage companies and financial institutions depend on this score to evaluate potential borrowers.
A score of 700 is considered acceptable.
Scores below 650 will result in higher interest rate loans.
Banks depend on your score to figure out what the risks are of making you a loan.
If you're fortunate enough to have a high score, you'll be considered a good credit risk.
However if you have a dismal score, you'll be considered a poor risk for a loan with lenders offering you a higher interest rate loan.
Insurance companies also place great weight on your credit score when evaluating you for a policy.
Insurers believe there is a direct correlation between the quality of your score and the likelihood of you filing a claim.
Independent studies reveal the greater propensity for individuals with a low credit score to file a claim.
Therefore, expect your insurance premiums to be higher than someone who has a better score.
If you have a low score, it's never too late to start rebuilding it.
You can start by ordering a copy of your credit report from the three major bureaus (Equifax, Experian, and TransUnion) and verifying all the information is correct.
Any incorrect information should be disputed with the bureau.
Next you should start establishing a positive payment history by paying your bills on time.
If you don't have a credit card, you can get a secured card to help you establish credit.
Over time, you can increase your FICO score.
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