Who Knows More About Your Finances?
You - or your automobile salesman?
Gone are the days when a hopeful couple sat across the desk from their local banker anxiously awaiting his decision on their loan application. Today, the fate of their loan and the rate of their interest hinges on a computer-generated number - their credit score.
What's the score?
The FICO credit score reflects dozens of parameters in one's financial history. For years, this number - named for developers, Fair, Issac & Company - was a tightly guarded secret. Congress has now secured your right to know.
- Score 700-850 - smooth loan process; best interest rates
- Score 550-699 - medium risk; higher interest rates
- Score 300-549 - sorry, rarely a loan or credit card is offered
Know your score
Are you soon hoping to purchase a new car? a new home? remodel your home? send a child to college? Before you talk financing, send for your credit report and FICO score. If there are errors or other surprises, contact creditors to make corrections or negotiate settlements. Also, be sure to notify the credit bureau of your dispute. Legitimate black marks on your credit won't disappear quickly. (it takes seven years; ten for a bankruptcy.) However, time and your diligence can turn things around. Lenders will give recent responsible activity due consideration.
In our credit-driven society, taking charge of your credit should be an on-going process. Your FICO score is a snapshot in time, not set in concrete. Review it each year for errors that may have crept in and to monitor your progress. You have the power to know it, raise it, maintain it.
WHAT HELPS: WHAT HURTS:
* Pay all bills - and pay on time * Too many credit cards or zero cards
* Maintain 2-4 credit cards * High non-mortgage debt
* Close unused credit or store cards * Delinquent accounts
* Keep balances well below the limit * Frequent job or address changes
* Pay more than the minimums * Charge Off's (bills marked uncollectible)
* Establish long-term credit history * Bankruptcy
BIG THREE CREDIT BUREAUS
If you are interested in being put in touch with a lender for pre-approval for a home purchase or to refinance your current loan, please contact me. I'm happy to recommend several lenders that I work closely with and trust.
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