Practice Credit Wellness!
4 Point Plan to Success:
Most people think if they not have claimed bankruptcy or bounced checks then all is well in credit land. Unfortunately, it’s not that simple. If you have let your payment schedules slip or allowed your credit account balances to creep up these practices can seriously impair your creditworthiness.
Since the new Fannie Mae and Freddie Mac guidelines for mortgages were released in late December 2007, lenders are being forced to charge more for loans in up front points and fees due to the increased risk factors. This means a low FICO score is costing you higher interest rates not only on your mortgage but for everything from insurance to auto loans. The difference between a low 600’s score and a score over 700 could easily mean $100 a month on a car loan and more on your home payments. Below are some tips for turning things around. The standards have been raised 20 - 40 points across the board this year and document stacks are that much taller!
Make 2008 the year you get on top of your credit! It may only mean changing a habit or two. For example, use auto drafts to make your mortgage payment rather than relying on the mail. Make more than the minimum payments on your credit cards and your score will improve steadily. It helps to have a goal…so here are some tips to help you chart your course!
Once you know what your score is, and you've made what improvement you can, you can become qualified to compare rates and product terms. To say: “Interest rates are under 6% today” does not mean you will not be offered these terms unless your credit picture is a rosy one!
Check our the My FICO score free calculator for comparisons on scores, rates and payments
Happy scoring! Loannetter
© 2008 susan templeton
Most people think if they not have claimed bankruptcy or bounced checks then all is well in credit land. Unfortunately, it’s not that simple. If you have let your payment schedules slip or allowed your credit account balances to creep up these practices can seriously impair your creditworthiness.
Since the new Fannie Mae and Freddie Mac guidelines for mortgages were released in late December 2007, lenders are being forced to charge more for loans in up front points and fees due to the increased risk factors. This means a low FICO score is costing you higher interest rates not only on your mortgage but for everything from insurance to auto loans. The difference between a low 600’s score and a score over 700 could easily mean $100 a month on a car loan and more on your home payments. Below are some tips for turning things around. The standards have been raised 20 - 40 points across the board this year and document stacks are that much taller!
Make 2008 the year you get on top of your credit! It may only mean changing a habit or two. For example, use auto drafts to make your mortgage payment rather than relying on the mail. Make more than the minimum payments on your credit cards and your score will improve steadily. It helps to have a goal…so here are some tips to help you chart your course!
- Set Your Goals: Every citizen can request a free credit report every year at http://www.annualcreditreport.com. Review your file, see what is reporting, how accurate it is and if you have any issues needing correction or addressing. This is your starting point to credit wellness.
- Learn the Terms: To manage your credit wisely it helps to understand the lingo. Read my article Credit Reports Defined or download the free booklet Understanding Your FICO Scores written by Fair Isaac, the folks who invented the FICO scoring system.
- Plan to Win – Once you’ve checked your report and defined any targets, you can correct your course. For example if you have been making late payments, set up an auto-draft system to pay your bills a few days before they are due—without fail. Even one late payment will affect your score.
- Keep Watch – Congratulate yourself once you see improvement…but don’t let up! About 6 months before applying for a major line of credit or mortgage, order a new credit report with a score. Unfortunately the consumer reports you buy yourself are ‘sanitized’ and may not have as much information as lender reports…so scores will vary. Your bank or broker will pull you lender report showing your scores for you when you are closer to financing, say 30 days prior to seeking a mortgage.
Once you know what your score is, and you've made what improvement you can, you can become qualified to compare rates and product terms. To say: “Interest rates are under 6% today” does not mean you will not be offered these terms unless your credit picture is a rosy one!
Check our the My FICO score free calculator for comparisons on scores, rates and payments
Happy scoring! Loannetter
© 2008 susan templeton