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!



  1. 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.
  2. 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.
  3. 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.
  4. 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

Popular posts from this blog

What's Your FICO Score Really Worth?

In today's market, personal credit scores are being skewed by a decline in average FICO ® scores. Why should you care? Well, if you are intending to get into debt responsibly in the coming year your FICO score is still the number one criteria your lender will use to determine your likelihood of paying them back. It's also one of the chief pricing factors to getting the best interest rate. That said, things are changing at a rapid pace. The newly minted FICO models are supposedly taking less consideration for small things like parking tickets but the really big defaults for big items like mortgages and car loans will weigh even more heavily as a result.  All defaults have less effect on your score as time goes on . With improved history that is! So it stands to reason that if more homeowners take the 'walkaway' option the impact will be figured into the score models for that particular historical period of consumer behavior. Essentially scoring mod...
Read more

Good Credit Scores=Good Behavior

Remember, your credit scores are based on your financial behavior, so good behavior is key to maintaining good credit scores as well as improving your current position. The List below is a quick review of how responsible borrowers behave . Always pay all of your bills on time. This proves your reliability and demonstrates consistent behavior and responsibility. Check your credit reports regularly and correct inaccuracies. Verify that the information reported about you is correct. Dispute anything incorrect with each of the credit bureaus immediately. Some disputes may require contact with financial institutions too. While it is best to document your disputes in writing, to all three bureaus simultaneously. Some bureaus provide customer service by telephone with instructions on how to register for a fraud alert. Monitor your accounts closely for signs of identity theft. Simply review each statement and verify that all bills are authorized, accurate, and your own. Guard PINs and acco...
Read more

Stop Your FICO From Becoming a Fido!

Online Mortgage Shopping Impacts FICO Scores If you've considered checking out an online mortgage site: think again. What they don't tell you is that their network may comprise multiple agents. Each may pull your credit report (separately) over a course of hours or days while they review your loan options. While all this is going on, your FICO score is taking a nosedive. Each mortgage inquiry can negatively impact your score 3 points. Each time. So if 10 brokers pull your credit in one 90 day period you could be 30 points worse off. And here's the scary part: each of those 10 brokers could actually submit your application to another 10 banks who also check your credit and that little exercise just cost you 30 points per broker...so the potential for damage is exponential. Because banks and lenders have strict FICO score requirements, a lower FICO Score can affect your qualifying for the loan you want. So much for convenience... What is a FICO Score? Invented by the ...
Read more