Keeping your Credit Scores in check is the key to financial success.
Typhoon Lou
President & CEO
Magic Funding Group, Inc.
There are five basic elements to
life that you should ALWAYS protect. Your health, identity,
character, family
and CREDIT SCORES. Since the first four are common sense
to most, I would like to expand on credit scores. Credit
scores are one of the most important elements in today’s
market to getting a loan. A solid credit score keeps
down the cost of consumer financing, and it can be the
deciding factor in whether an auto or home loan application
is approved. As a rule of thumb, always remember that
the higher your credit score is the more loan programs
you will qualify for, which leads to a lower interest
rate.
Fortunately, in today’s fast-high-tech society,
credit history is normally reviewed by artificial intelligence
called a computer. This computerization has made the
loan process much more efficient as well as take all the
subjectivity out of credit evaluation, and that means
you have to take ownership of your own credit standing
to make sure you’re not blindsided by any stain
on your record.
By the way, everyone is entitled
to one “free” credit
report a year. Various companies, including Experian
Consumer Relations (1-888-397-3742), can show you your
credit profile. However, on numerous occasions I have seen
erroneous information that appear on a credit report
that may take months to correct, which might mean the
difference between being able to purchase your dream
home or not.
Credit scores usually range between 400 on the low side
to 800 on the high side. On rare occasions, these ranges
can be exceeded. Sometimes a score cannot be obtained
for factors like lack of credit history or too few trade
lines of credit.
Having your credit score in check BEFORE you purchase
a car or home can save you a lot of time, headaches and
money. Here is a basic breakdown on how a lender or creditor
views your credit scores:
Borrowers with scores over 700+ are usually granted exceptions
for other problem areas like new employment or frequent
job changes. These borrowers can get the benefit of extended
qualifying ratios to help them obtain a loan. This is
a big plus not only in getting approval but also in avoiding
the more costly "no income verification" option.
If you would like to improve your credit, there are
a few things you should know. An easy way to start is
by increasing your credit limits. If the ratio between
the amount of credit you owe and the maximum credit limit
increases, the computer views it as a plus in scoring.
Try to avoid frequent inquiries into your credit history.
To many inquires can lower your credit score. Fortunately,
multiple inquiries can have a negative impact on your
credit score but only lasts approximately 30 days.
Keep in mind that you have a right to an error-free
credit report. For instance, if your profile shows a
late payment without a specific month of delinquency,
that item can be removed. This is a great tool, but you
need to check your credit and make the requisite phone
calls.
Remember, it may take a couple of months for your credit
score to reflect the changes. There are three credit
bureaus that report a score, so in essence you will get
three scores for your credit. In addition, creditors
usually take the median of the three scores.
720 and over |
Outstanding Scores – Leader of the Pack Best rates & terms |
700 – 719 |
Excellent Score – Very Desirable Borrower Great rates & terms |
680 – 699 |
Good credit - You should be in strong position to buy. |
660 – 679 |
Okay credit - Don’t look for other exceptions |
640 – 659 |
Borderline - Okay if everything else is strong |
620 – 639 |
Weak - The rest or your file must be perfect |
600 – 619 |
Difficult - Needs some work or a special program |
Below 600 |
Trouble - Try to fix up your credit |
OR
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