Improve Your Credit Score

By Debbie Wilson
LoanPage.com Columnist

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Improve your credit score and you could save yourself thousands of dollars. How? Well, your credit score determines how much you pay in interest on your mortgage, credit cards, life insurance, auto policy, and much more. In fact, a credit score can even be the deciding factor in whether you get that job you've been hoping for. So, what is a credit score?

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Credit Score Explained

The Fair Isaac Corporation was first to develop credit scores to determine how likely you are to be a good credit risk. To determine your score, computers grind up a ton of information about your credit history and spit out a number. This number is labeled your FICO score. FICO scores range from 300 to 850. A score of 720 or more is considered good by most standards and above 760 gets you the best rates.

How Credit Scores Affect Your Mortgage

Credit scores can have a direct affect on your mortgage interest. A score of 760-850 could get you a 6.3 percent interest rate on a 30-year fixed mortgage, whereas a score of 620-650 might be closer to a 7.9 percent loan rate. That difference could amount to approximately$250 per month and more than $85,000 over the life of the mortgage. There are many websites where you can calculate your potential mortgage interest rate based on your FICO score.

Credit Fixes

The fastest way to improve your credit score is to pay your bills on time and reduce the amount of debt you carry. Knowing exactly what's on your credit report can be an excellent place to start your debt consolidation plan. You can obtain a free copy of your report once every 12 months from each of three bureaus. Knowing your score can help you spot potential problems and develop long-term financial solutions.

Sources
www.myfico.com
www.annualcreditreport.com

About the Author
Debbie Wilson owns and operates a lakeside resort. Her previous experience includes profitability consulting for a national healthcare company. Debbie holds a B.A. in Business Management with a minor in Physical Education.

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