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Credit Report Score Speak Directly To Your Wallet |
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A credit report score is an index of the
chances of your being able to pay back your loans. It is based on information provided in your report card. Your ability to get the best loans is, therefore, dependent on your credit report score. The better your credit report score, higher the chances of getting more loans at better interest rates. Although there are many types of credit report score, the most commonly used for large loans are FICO scores, which are based on a scoring system developed by Fair, Isaac. The three national credit bureaus (Equifax, Experian and TransUnion) provide these to lenders. It has now become easier for consumers to view their own FICO credit report score or a comparable version from each of the three credit bureaus but until recently only credit grantors and lenders could obtain credit report score used in loan decisions. Before shopping for a loan, you should review your credit report score at least three to six months in advance to give yourself time to improve your standing. There are many advantages of a good credit report score but the one that gives maximum financial benefit is the interest rate, which comes down, as your credit report score gets better. It gets lower by 3.45 percentage points if the credit report score changes from 520 to 720, according to Fair Isaac's Web site. That would work out to a saving of $85,000 on a $100,000 30-year mortgage and the saving in the monthly payment works out to about $235. Ways To Improve Your Credit Report Score To improve your credit report score, do the following: 1) Make sure all the information in your credit report is accurate 2) Dispute any inaccurate items in your credit report 3) If there are any collections or past due amounts in your credit report, pay them off 4) Try to eliminate loan balances by paying them off, if you can 5) Try to have a period of 12 to 24 months with no late payments, past dues or other derogatory items 6) Try to minimize the number of inquiries into your credit report from credit grantors by not applying for credit unless absolutely necessary. To be able to get a true picture of your credit report score, you should obtain the same from all the three national credit bureaus. As reporting is not mandatory, many companies report on your account only to the bureau in their region and not to all the three. As such each credit bureau may have slightly different information about you. Mortgage lenders, however, review all three of the national credit bureaus' FICO scores and take the middle score - not the average--to assess your eligibility. It is better for you to know the middle score and try to improve it as best as possible. How Much Does It Cost To Get A Copy Of Your Credit Report Score? You are entitled to get a copy of your credit report score at anytime from any of the three major credit-reporting agencies (Experian, Equifax or Trans-Union) for a small fee ranging from $2 to $8. However you can get it free if you have been turned down for credit from the bureau supplying the information that was the basis for denial. There are some states that entitle residents to a free credit report at least once a year. At TransUnion your credit report score is automatically included in your credit report, whether you get it free or not. There is, however, no requirement that credit report score is offered free. When you obtain your copy of your credit report score from any of the three major credit reporting agencies, after paying their fee, you will also get an indication of how your credit report score ranks nationally and an explanation of how you can boost your standing. |
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