It Helps to Monitor Your Credit Score
Posted on June 7, 2008 | Filed Under Finance
What exactly is credit score? If you are not aware about your credit score, it is high time you check out now. We will now analyze why you should always keep track of your credit ratings, and how to monitor your credit score.
First up, a brief background knowledge. Your credit score is calculated with reference to data about you from lenders that have financed you so far. They submit information on your payment history to the three major credit reporting bureaus. These organizations then make a numerical score, also referred to as a FICO score (named after the Fair Isaac Corporation).
You can equate your credit score to grades for a test in school. Credit score and credit rating move in tandem. FICO scores move in the range from 300 to a maximum of 850. You will have target a level of 700. Why should you bother then?
*A more low-cost mortgage
A better credit score will fetch you home finance at lower rate of interest. and, banks give a very high weightage to your FICO score when you request a home equity loan. For example if you manage to get a reduction of just 2% in interest rate on a 30 year fixed mortgage on a $200,000 house you will save almost $100,000!!
* Cheaper insurance premiums
Your credit score is verified by many auto insurance companies and health insurance companies to work out your insurance premium. Statistics suggest a definite relation between FICO score and insurance claims. So, they reward customers with better credit by providing them a cheaper premium on life, health, and auto insurance.
*A better job
It has bee observed that employers are ascertaining your credit reports of prospective employees. Although they may be acquiring the report to check the information you provided in your job application, there is nothing to prevent them from discovering how you manage your fiscal affairs, as well.
Therefore, several additional facets of your life are being impacted by your credit score than you may have thought. One thing for sure is that better score will help you raise your living standard with cheaper interest rates, a better job, and a more affordable lifestyle. Back to basics: What is your credit score?
You can obtain your credit score rather easily. In fact you can get one for free from each of the three major credit reporting bureaus once a year. Just log on to annualcreditreport.com This is a web site supported by the credit bureaus. It is completely your option whether you order all three credit reports simultaneously or order one now and others later. The advantage of calling for all three at the same time is that you can compare them. All the same, you will not be eligible for another free credit report for 12 months. On the other hand, the advantage of ordering one now and others later for example, one credit report every four months is that you can ascertain whatever modifications or fresh information that may come out on your credit report. It is important to follow your credit report, because it is modified over time as your lenders provide fresh data.
Note that your complimentary credit report will not contain your FICO score. The three major credit bureaus (Equifax, Experian, and TransUnion) would rather charge you for that bit of data, like many other web sites. Beware about all offers coming your way like monthly reports but for a subscription.
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