Monday, December 31, 2012, AM | 3 Comments
If you want to go to another country, you have to have a passport. If you want good and competitive interest rates that you can live with easily, you have to have good-to-excellent credit score. That’s the basics of the financial borrowing and repaying loan of any kind.
Without a good credit score, the lenders will try to screw you financially and sooner or later you might get into problems because of the higher interest rates.
Take the credit score business seriously…
In order to take credit score seriously, first try to understand what kind of actions (or lack of) affect it. If you look at FICO chart, two out of the five categories affect credit score the most:
- Payment History – 35%
- Amounts Owed – 30%
- Length of Credit History – 15%
- New Credit – 10%
- Types of Credit Used – 10%
The rest of the three categories are important as well. But if you are careful enough to follow the above two, you will be in a far better position than you might be now.
The three categories that have lower effect on credit score, but nonetheless can improve or worsen your score.
A complete description of these five categories is given on the FICO Chart. Read it, understand it and act accordingly to improve your credit score.
Consider your credit score close to your heart along with your kids and your favorite pet. It’s that important. Your financial life may turn out to be your physical life as well.
Improve your credit score…
There are ways to improve your credit score. If you do it yourself, it will be free or almost free. However, there are companies who would charge you for their services for not only getting you a credit report but monitor your score as well.
Checking your credit reports and scores on a regular basis is an important part of achieving and keeping healthy credit.
If you improve your score and maintain it, preferably at excellent level, you would do not only yourself a favor but your kids (and your pet) as well.
Good Credit Saves You Money…
There are very many benefits to a good-to-excellent credit score. When you apply for loan such as mortgages, cars, credit card offers, job offers, insurance premiums and more, then a strong score is worth money because it saves you in excess costs.
Good credit saves you money in the following different ways:
Reduced Interest Rates
When you get loan with lower interest rate, your monthly payments will therefore be lower. So you can manage your debt more successfully.
Reduced fees and Finance charges
If you are late with your payment, the credit card issuer would look favorably when it charges late fee and finance charges.
Your application for loan
When you apply to new loan and your credit score happens to be lower than good-to-excellent, your application for loan may be declined. You ought to have developed trust with the banks. Improving your credit score will give an edge with the banks in accepting your application.
Increased Credit Limits
With good credit score, you will get increased credit limit which is good for you in case you need it.
Qualify for Apartments, Jobs and Insurance
If you apply for renting apartment, or job or any kind of insurance, you will be looked at favorably.
Protecting Identity is a must for improving your credit
You improve your credit score but somehow you lose your identity to thieves, you might as well be back at square one.
Keep in mind the following points all the time. Don’t fall asleep at the helm of your ship.
Always be aware of your finances
One thing you can do is to get your free annual credit report now. Examine it very carefully. Wherever you see any deficiency and believe your identity has been compromised, immediately call the responsible folks and square away any issue that you may have.
Take your Identity Protection quite seriously
Some finance gurus have reported that Identity Theft is costing the average victim as much as $4,200. You may not believe in statistics but when it happens to you, it would be too late. Believe it “when something breaks (your financial ID), it will.
Repairing ID damage might take seemingly forever
If you are the victim of ID theft, it takes 330 hours, on the average, to repair the damage it has caused.
You have establish your good name. Protect it
It takes many years to establish your good name. You have done everything possible to improve your credit score. Don’t let ID thieves steal your identity. It will bring you back to square one.
In a Nutshell
Improving your credit score has obvious benefits that you might be missing if your score is bad-to-worse.