Saturday, January 3, 2009

Importance of credit score

It's very important to know your credit score and understand it completely, as it help you to get loans, mortgage and even a job. Credit report list personal information such as name, address, date of birth, social security number, number of family member, your employer..etc. Financial situations like bankruptcies, tax liens, foreclosure, late payment of your bill...etc, will also be listed in the report.

Your credit score list plenty of information about your financial actions. Your loan or credit account, and how your pay them, your current debts, type of debts...etc. All these information are listed in the report. The creditors, lending agencies and other companies will consider your credit score to determine if they can finance you without a risk. Any doubtful record create a negative impact and can affect you in many ways. It's not only in case of sanctioning a loan but also determine the rate of interest. Lower the score, higher will be the interest.

According to the data of Jean Chatzky ( the financial editor for NBC's The Today Show ), in May 2006, to qualify for the best rates on a mortgage loan, home buyer needed a credit score of 620 or higher. Just 2 year later in May 2008, you would have asked for a credit score of 750 to qualify for those same rates. So it's important to review your report once in a year, so that you are aware of your report and know what the creditors say about you and also can work on improving your score. Knowing your credit report will help you make important financial decisions.

Tips to improve and maintain a good credit score:

1. Collect credit report from Experian, TransUnion and Equifax. Review the report for any error or mistake.

2. Try to reduce the debt of those with high interest.

3. If not in full, try to make payment of minimum balance due of credit cards.

4. Pay all you bills on time. Late payment can do a serious damage to your report.

5. Avoid credit from Financial companies. It can negatively affect your score.

6. Don't apply for too many credit account.

Credit score determine your financial status, so one should always try to keep it as good as possible and avoid any such actions that can affect it and result a low score.

6 comments:

Isolde said...

This is a wonderful point - you can never underestimate the power of your credit score! You never know when you might want a loan or need another source of funding - check your score, be prepared!

Credit Repair said...

Hi,

Really, you provide a good information on the importance of credit score.
Thanks for sharing.
__________________
Repair Credit Score | Bad Credit Repair Advice

Consultant said...

there are many advantages of having a good credit score. the biggest advantage of having good score is that you can get loans on lower interest rates.

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Credit Repair

Joe said...

Credit Report is a file that shows your credit history and seriousness towards your liabilities. Creditors don't like to give loans to consumers who are not good in making payments. Also a good credit score helps you to get loans on low interest rates.
if your credit report doesn't reflect good signs, you can use Credit Repair Services to get your report repaired.

Anonymous said...

The first step to financial freedom is to check your credit score and credit report.

Parag said...

Credit card companies and FICO scores are determined not on how well there is a bill pay when applying for new or more credit as much as how close to the maxing out of current credit the month before a credit card application.
Importance of good credit score