How To Boost Your Credit Score Safely & Smartly

How To Boost Your Credit Score Safely & Smartly

-------------------------------------

One of the keys to having a strong credit record is your credit score, the number the three major consumer credit reporting agencies develop to help lenders decide whether you will receive credit, for how long (your term), and the interest rate that you will pay. The higher your score, the more likely you’ll be approved for a loan and at a competitive rate.

Experian, TransUnion, and Equifax are the three private agencies who track your credit and each one “scores” you based on the financial information that they have about you. Thus, each one will likely return numbers that are different from the other two, but their scores should be in the same ballpark.

Your credit score is also called your FICO score which stands for Fair Isaac Corporation score, a formula developed by Fair Isaac and used by all three credit reporting agencies.

If you are looking to buy a home and are seeking to finance it for 30 years, taking out a $300,000 loan then the most recent FICO numbers would give you the following loan details:

FICO® score APR [?] Monthly payment
760-850 5.647% $1,731
700-759 5.869% $1,773
660-699 6.153% $1,828
620-659 6.963% $1,988
580-619 9.312% $2,482
500-579 10.276% $2,694

These are national averages, so your loan will look slightly different where you live. As you can see, the $950 per month premium for the person with a score in the low 500s, would add more than $10,000 annually to the loan, that is if they can get approved in the first place.

So, what can you do to raise your score? It can’t be changed overnight, but if your score is too low you can do the following which should yield decent results within 3-4 months time:

Clean up your credit report — that’s right, if there are errors on your report your score could be artificially low. Start off by checking your report first for accuracy before proceeding.

Pay on time — late payments can weigh you down, therefore make sure that you pay every bill on time.

Pay down debt — you don’t have to pay off all of your debt, but if your percentage of debt as related to credit line is over 35%, then that will lower your score.

Clean up an old mess — that unpaid and uncollected money you owe from long ago could be biting you in the backside. Contact creditors and offer to pay at least a portion of what you owe to settle your debt once and for all.

As always, check your credit regularly by ordering a credit report and your credit scores to see where you stand. Obtaining both is a small investment which can pay near instant dividends.

-------------------------------------------------------------------------------------------------------------

end of post idea

-------------------------------------------------------------------------------------------------------------

Helpful article? Leave us a quick comment below.
And please give this article a rating and/or share it within your social networks.

Categories: Credit Reports

Comments

  1. Nick
    Nick 15 May, 2008, 16:32

    It is possible to get your free credit report AND score from the different companies that advertise on TV and throughout the web (freecreditreport.com comes to mind). You simply need to be aware that they are signing you up for a trial credit monitoring program and to cancel it within a month of getting your reports. I’ve yet to have any problems with any of them myself.

    Nicks last blog post..1

Write a Comment

Your e-mail address will not be published.
Required fields are marked*

Time limit is exhausted. Please reload CAPTCHA.