Credit Score Basics – What You Need to Know
Many of us probably think of our credit scores and financial reports as nothing more than chores that need to be tended to from time to time. However, your credit reports do play an important role in your life, and it is often a deciding factor in not only mortgages and loans, but employment opportunities as well.
It’s time to pay a little more attention to the basics of credit education. After all, it could allow you to make smarter spending decisions.
Here’s all you need to know:
- FICO Score
This is one of the commonly used benchmarks by lenders to assess whether your credit history is worth the loan. What you may not know is that a really good FICO score can actually help you save money. How? Well, the lenders will offer an enticing lower interest rate on the loan or mortgage.
- Free Credit Reports
Everyone, and by that we mean everyone, is entitled to one free credit report every year. This is stated by federal law. Accessing your free report enables you to keep tabs on your credit health. This can prove to be useful if you are applying for a loan, mortgage or insurance.
- Disputing Credit Scores
Credit reports and scores are not set in stone. Since they are generated by complex calculations, taking into account certain financial factors, there is a possibility of errors creeping in. You can dispute any discrepancies that you find. Enlisting the help of a credit monitoring agency could be a good move.
- Better Scores Means Better Interest Rates
Consider these numbers: A loan of $250,000 at 5.25% interest will cost $243,650, and that’s just in interest over thirty years. The same loan amount at 4.25% interest reduces the interest to around $189,933. This shows what a difference of 1% interest can do to your total loan amount. This is the difference the lenders will give you with a good credit score.
- Financial Factors That Make Your Score
One of the most common queries people have is: “how is my credit score calculated?” The credit bureaus use payment history and outstanding balances as the two main factors. These factors account for nearly 60% of your score. Other factors include the length of your credit history, types of credit used, and the number of credit inquiries. They make up the rest of the credit score.
It’s crucial that you understand fundamental information about credit scores and credit reports. With the help of a reputed credit repair company, you can fix your credit and learn the tools to maintain a good rating.
At Action Credit Repair, our experts will provide personalized credit consultation, an audit of your credit history, and offer solutions to all of your credit obstacles. Contact us today to speak with an experienced professional: Call 518-945-2299 or email [email protected].