Your credit history and credit score are some of the most pivotal components to your financial life. It will tremendously affect your financial situation throughout your lifetime and you can’t evade your credit history. It predominantly determines if you can get approved for a loan and what your interest rate will be. Typically the better the credit score the better the interest rate, which can add up to thousands of dollars in savings on interest payments.
People usually only think of their credit when it comes time to apply for a loan or credit card, but that might be too late. Make sure you know your credit history now. The Consumer Financial Protection Bureau (CFPB), which is an independent agency of the United States government, is responsible for consumer protection and has published information for consumers to get a better understanding of their credit and how to keep a good credit score. They also have provided information on obtaining a free credit report. Make sure you take advantage of these resources now to insure a better financial outcome in the future! You can read the full version of this valuable CFPB article here.
“Your credit report shows information about how you have used credit, such as how much credit you have, how much of your available credit you are using, whether you have made your payments on time, and whether anyone has sent a loan you owe to a debt collector.
A credit score is a number that is used to predict how likely you are to pay back a loan. Your credit score starts with the information about you from your credit report. A mathematical prediction formula is applied to this information about you from your credit report. That prediction formula, which is called a scoring model, creates a number which is your credit score. You probably have numerous credit scores.
Credit scores are used by companies to make decisions such as whether to approve a mortgage at a certain rate or issue a credit card. Different lenders use different scoring formulas so your score can vary from lender to lender. Usually a higher score makes it easier to qualify for a loan and means a better rate of interest. Most scores range from 300-850, although there is one scoring method that uses a range from 501-990.”
This article by the CFPB goes on to highlight 8 steps that you can take to get a and keep a good credit score.
1. – Pay your bills on time and if possible pay your credit card balance in full each month.
2. – Don’t get close to your credit limit. In fact, paying off a credit card and closing the account will put you closer to your credit limit and may hurt your score.
3. – Don’t apply for a lot of new credit in a short time. This is especially important right before applying for a car loan or a mortgage. Opening a lot of store cards and applying for new credit cards can hurt your score.
4. – Build a long credit history. The longer you build your credit the more your score will grow. Keep working at it!
5. – Get your credit score every year, and don’t pay for it. Free credit reports are available to you online, by phone and by mail. These reports are adequate.
6. – Read your credit report and dispute any errors. If there are inaccuracies in your credit report you need to dispute them. This will require documentation but it is important that you keep your credit report accurate.
7. – Avoid paying upfront fees to “fix” your negative credit history. Fix inaccuracies in the report yourself by reporting them and then get started on these tips to improve credit and it will happen sooner then you think.
8. – Be proactive with your debt. If you are struggling to make payments talk to your lender. They may give you a temporary payment plan option but they won’t be as generous once you’ve fallen way behind.
To learn more about these 8 tips read the CFPB article in full!
Call Title Mortgage today at 603-643-1400 to discuss your financing options. We are here to help you! We will review your credit report for free and answer any questions you may have to see which loan programs would work best for you. Additionally, we may even be able to help you increase your credit score by using our credit simulator. Give Title Mortgage a call today and speak with one of our licensed mortgage professionals!