Good Credit
Good credit can save you a lot of money. Interest rates are determined
by your credit/fico score. You can typically expect to pay 1%-2% less
on a mortgage, if you have a fico score of 720 or above. Some loans even
require a score above 760 to get the best rates. If we assume the average
home price is $300,000.00 and that you have excellent credit, you will
save 3-6 thousand dollars in just the first year of your mortgage. If
you add up the lower rates you get on credit cards (average home has $9000.00)
and car loans. You may save another $2000.00. This means that in the year
of your home purchase you could save around $8000.00; not a bad payoff
for being responsible.
Fair Isaac reports that the American public's credit scores break out
along these lines:Realistically you need a minimum of 620 to be in the
ballpark. In addition, you should shoot for 720 and above for the best
financial credit terms.
Credit score Percentages
499 and below 2 percent
500-549 5 percent
550-599 8 percent
600-649 12 percent
650-699 15 percent
700-749 18 percent
750-799 27 percent
800 and above 13 percent
Bad Credit
Unfortunately it is not always possible to have good credit. Some of
us get very sick, lose our jobs, or get divorced. If you have poor credit
due to unforseen circumstances, we hope this website will help you make
the right choices to stay on track. We will show you how to raise and
preserve your credit score. If you have bad credit don't despair too much.
Credit companies will generally give you another chance after you have
made two years of payments on time. If you have made poor decisions in
the past because you didn't understand credit, you have come to the right
place to learn how to manage your credit.
What Determines Your Credit Score? These are approximations.
Fair Isaac corporation holds this information secret.
1. Your payment history – 35%
2. How much you owe – 30%
3. Length of your credit history – 15%
4. New credit –10%
Applying for new credit will lower your score. Old established credit accounts
raise your score.
5. Other factors – 10%
We refer to this as the credit mix and/or mystery factors (nobody really
knows much about the final 10%). The credit mix looks at what kind of creditors
are bundled together with your report. For example, do you have 3 car loans
and one mortgage or six credit cards and two revolving accounts.
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