September 30, 2010
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News: It's Time To Fix Your Credit Score
Do you understand what a FICO score is? Do you know what goes into creating a FICO score? FICO scores are credit scores. They are not only used by banks in determining your credit risk factors, they are also used by insurance companies, potential employers, landlords, and credit card companies. At one time a score in the low 600's was acceptable. However, today in order to qualify for a mortgage or credit card, most banks require individuals to have a minimum score of in the 700's. Any score under this would be highly scrutinized by the underwriting department. In some cases, even a 700 would not be consider sufficient for some credit card application approvals. If your payment history is less than perfect, you can expect the interest rate offered for a new loan would be high. The difference between a score of 720 and 650 can increase your interest by 1, 2, or 3 percent. Getting a lower interest rate could save you hundreds of dollars a year.
It's time to fix your credit score. Under the FACT Act amendments to the Fair Credit Reporting Act, you are entitled to one free credit report within a 12 month period from each of the three major credit reporting bureaus, Equifax, Experian, and TransUnion. Use the credit report to see what negative information exist that you'll need to get removed or fixed. The credit report lists all open and closed accounts including credit card accounts, auto loans, and mortgages. If you have any judgments or collections that are paid, you should file a dispute saying they have been justified. If there are any that need to be taken care, call the companies immediately and make arrangements to pay monthly payments if possible. Most credit card companies are willing to work with consumers to pay back debt.
When reviewing your reports, it would be wise to print a copy for your records. Remember, you're only eligible for a free report once every 12 months. If you'll be disputing items on your report, you might consider signing up with one of the programs that offer unlimited access to your report for a small fee. You can pay by credit card online or check/money order via mail. Upon receipt of your credit report, you can begin the process of repair.