It always amazes me that we get so many phone calls from people looking to buy a home who have no idea what their credit score is. Most callers know that their credit is “good” or “not so good” but the actual credit score is what determines their suitability for financing and determines just how much the loan will cost them.
Asking a few people about their knowledge of credit scores proved an enlightening exercise. Most of the persons I asked didn’t know how they could find out their credit score – many thought that only lenders could access that information.
But that is not true. You have as much a right to learn what your credit score is as anyone else. And only by knowing what your credit score is, can you take charge of this important aspect of your life. Keeping an eye on your credit score can give you a feeling of confidence when it comes time to borrow money for that new home or new car. It can also alert you to problems in the making that could cost you a lot of money down the road and give you an opportunity to do something about it before you need to use it.
Ok, so how does a consumer learn more about their credit score?
I ran across this info on how FICO apportions parts of a consumers credit history to arrive at the FICO score that lenders use to determine creditworthiness. I made the figures into the graph you see below:
Other credit scoring agencies may use different weighting, but I would imagine that they are fairly close to this.
One sure thing in today’s world is that you should check your credit score on a regular basis. If your score has lowered from your last check, it is time to do something about it. If you are in the market to buy a home, this is crucial as keeping your score as high as possible will enable you to get the best deal on a mortgage.
You can check your FICO score at MyFICO.com. There is also a handy calculator you can use to determine how your score affects your loan payment on a 30-year mortgage, a 15-year home equity loan and a 36-month auto loan.
MyFICO.com also has calculators that deal with many other financial questions, such as which loan is better, how much can I borrow, should I consolidate my credit cards and more.
[tags]credit score, lending, mortgage, FICO[/tags]
Trackback: hottest investors