“Knowledge is The Key to Success”

Know Your Score: Credit IS Everything

We live in a credit based economy. For most of us, the ability to buy a car, attend a university or purchase a home often depends on our ability to secure a loan or line of credit. And when banks and credit companies consider giving a loan, and how much it should cost you, they almost always look to one number to guide their decision – your credit score.

A difference of 50 points can translate into tens-of-thousands of dollars in money saved on repaying a 30-year mortgage. Credit scores are often seen as abstract, ominous variables that have the ability to empower or cast a dark cloud over one’s financial future. But a little knowledge can go a long way in helping you to manage your credit and improve your score.

Credit reporting agencies calculate scores using several categories of financial information including:

• How long you’ve had credit
• Payment history
• How much debt you carry
• How much new credit you’ve been looking for

The single most important item is your payment history, accounting for 35% of your score. This indicates how good you’ve been at making payments on time. The more often you pay on time, the more it improves your score.

The length of your credit history makes up another 15% of what goes into calculating your credit score. The types of past accounts and any attempts you’ve made to obtain new credit make up the remaining portion of your credit score (10% each).

A long history of paid, diversified accounts and a minimal number of requests for new credit contribute to a higher score. And that means lower interest rates, which can translate into thousands of dollars in money that you save.

Over time, you may have made unintentional mistakes in your use of credit that have had a negative impact on your credit score. These mistakes can mean that you have been locked out in your ability to obtain a new loan (for any reason), or, if you receive the loan, that your interest rate is higher meaning that the credit you do obtain costs you much more than it otherwise might.

Credit re-scoring can help to raise your credit score and thus save you big dollars by allowing you to qualify for the loan you want at lower interest rates. Credit re-scoring can pay for itself with the dollars your higher score will leave in your wallet. By spending a little, you can save a lot! Get started now down the path to a brighter, richer future. Re-score now!