Few people understand the real financial impact their credit score has on their lives. When you have a higher “qualifying” score, your cost for a loan or insurance may be less. Not only is it important to understand your credit score, but it is also important to understand how you can improve your score in order to reap the benefits of good credit.
How is my credit score calculated?
Credit scoring systems are complex and vary among creditors and businesses. Essentially, information collected from an individual’s credit report is put through a statistical program that compares that specific information against the “ideal” consumer and to those with similar profiles. The program identifies characteristics that the scoring model relates to risk and generates a number representing the credit score.
What should my credit score be?
The higher your credit score, the less of a risk you are considered to be. The scores generally range from 300 to 850. In Mortgage Lending, a score of 740 or higher generally means that you are eligible for the best rates.
How do I find my score?
The three nationwide credit reporting bureaus have set up a central website and under Federal law you have the opportunity to receive a free annual credit report from all three bureaus. Visit http://www.annualcreditreport.com or call toll-free 1-877-322-8228. Consider staggering your requests from each bureau over a 12 month period to provide the greatest coverage.
Follow these general steps to improve or maintain your credit score:
• Pay your bills on time.
• Do not max out your credit limits.
• Do not apply for too many new credit accounts in a short period of time.
• Do not have too many credit card accounts.
• Develop a credit history as early as possible to demonstrate a long record of responsibility.
Contact the experts at Sunset Bank to discuss how your credit score may impact the terms of your mortgage loan.
Suggested Web links for more information about your credit score:
Your Access to Free Credit Reports
To Obtain Your Free Credit Report