Whats Your Credit Score Like?

Credit granting policies appear to be getting tougher today in the credit crunch,  so one of your tasks to carry out regularly should be to raise your credit score.   Most people do not think about their credit history often, but not doing anything about it,  year after year,  is undoubtedly one of the worst things you can do.

This is very true for mortgage loans,  where it was not all that many years ago when one could get licensed for a particularly enticing mortgage loan at almost the drop of a hat.   But this is also significant for other sorts of credit like automobile loans, credit cards, bank loans, and more.

The major reason it is vital to have your credit report as high as practical is because all lenders for giving you any sort of credit will look at your credit report so they can see what sort of a credit risk you will represent to them when they consider your loan request.   The interest rates and incentives they will offer is basically dependent on how much of a risk they feel you represent to them,  and that risk factor is determined mostly by your credit score as reported by the credit reporting agencies and credit bureaus.

For example,  look at a normal mortgage loan,  which likely amounts to a 6 digit figure for most mortgage holders nowadays.   The difference of about 20 points in your credit report may be the difference between getting a great loan rate or one that could vary by as little as a tenth of a % on the mortgage.   What is a tenth of a percent?   Over the term of the loan,  even those tenths of a % can sum up to more than $10,000 more than you would have paid if you had taken the time to raise your credit score before filling out the loan application.

With regard to your credit report,  there are some things reflected on your credit score which you have no control over,  such as your amount of income.   You also cannot control the total amount of your overall debt.  But here is where it could actually get far harder than it needs to be.   The actual amount of your outstanding debt might not be precisely reflected on your credit report.

In addition,  the standing of each of your finance agreements won’t be exactly reflected either.   Multiple studies have discovered that the majority of purchasers have a number of blunders in their credit score.   These errors can even be as ludicrous as having accounts listed that do not belong to you, which is common for people with common names.   It might have a debt reflected as being past due when it really is totally up to date.  It may have your balance listed as $8000 when in truth your balance on that account is $80.  All of these errors compound into manufacturing a credit report for you that is lower than it should be if things were reported accurately.

Your most important step in this process is to get copies of your credit report and credit score from each of the three major credit companies.  Go over them with a fine tooth brush and then file an argument with the credit bureau for anything that is not accurate.  The credit bureau is obligated by law to either determine the information as correct,  or correct it,  or in some cases, even remove it.

Invest the time now so that you do not become a victim of your own credit score.   Take the effort to raise your credit profile and make this a regular part of your standard financial responsibility tasks.   The money you will save will be far better in your wallet than it will being paid out in loan payments.