Credit Score

The good news is that the economy is picking up. Now everyone is starting to look for new houses and buying new cars, so that credit score becomes very critical in all of those issues. It affects everything, so you need to be very cautious about this. Your credit score determines your rate on loans on your mortgages, on your credit cards. It can even affect your job and your rental prospects.

You need to pay attention to that score. Low scores may mean you get a “No” on that loan. High scores mean lower rates, meaning you can buy more house/more car/more stuff.

The first “A” is that it does affect everything. Then, the “B” is: are you buying something? Are you looking to buy a new car or a new house?

When it comes to a car, poor credit may mean a denial on a loan. And poor credit means that your average rate on that car loan could be 13%. Those teaser rates of 0%? Forget getting that with a bad score. Those are only for the folks who have very high scores.

On a house, scores below 680 probably won’t get approved. 90% of the mortgages last year went to those people who had high scores.

To the big “C”: credit number crunching. We have something called the FICO score which stands for Fair Isaac Corporation. That’s the company that designed the scoring system. Scores ranges from 300 to 850, but scores below 720 will typically result in a higher interest rate on those loans.

About half of us have scores below 700, and a third have real problems. They have scores between 550 and 699. To get a score, you have to pay for it. You can get a free credit report, but not a free score unless you are turned down for credit. At that time you are entitled to a free score.

The good news is that the interest rates will probably remain low for an extended period of time. We’re talking for the next couple of years. So, you have time. Get that credit report. Clean up your credit score and improve it. Pay your bills on time. You can go to and get a free credit report and look at that. See if there are any problems on there. Address old bills and problems. Pay off those smaller bills. Keep that score clean, and then you’ll be ready for that big purchase.

Most of us don’t have perfect scores, but if you’re over 720, that’s an excellent score. You will probably get approved for almost anything. If you’re in the 600s, you’re going to have some problems. You may get approved, but you’re going to have a higher interest rate which means it’s going to cost you more for those things.

#credit #creditscore #interestrates #financialplan #investmentadvisor #financialadvisor #feeonlyfinancialadvisor

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