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The Secret Power of Your Credit Score

Improve Your Credit Score...is it possible?

by Dr. William Duhey

People often ask me...where does my credit score come from, how can I raise it?

 

Your credit score is powerful, it comes from credit report data reporting how well you pay off loans and credit card bills. Computer software analyzes the data and comes up with a number, that number is your credit score. In the end, it’s your credit score that measures the risk of payment default. At one time a 720 score got the best interest rates. No more. Right now the number is around 720 for a three year car loan, and it takes a score of at least 760 to get a 30 year fixed-rate mortgage. In short, your FICO score is a powerful number.

 

But the software only takes into account items reported on your credit report, your credit score changes when lenders don’t report items that update your credit information. So be smart and pay attention to your credit score.  Check your credit report often to make sure your information is correct and up-to-date. Remember you can get one free report every year from the three credit-reporting companies by visiting the website annual-creditreport.com. On the other hand, Fair Isaac will charge you a fee see your FICO credit score.

 

It’s also a good idea to check your credit report before trying to get approval for credit cards, insurance, loans, rentals, and utilities; that way you’ll have more knowledge of your situation before you approach a lender.  Also remember it’s your FICO credit score that determines whether you’ll get approval. This is true even if you’re trying to raise your credit limit on your existing credit cards or store cards. Now in the midst of an economic crisis, more than ever, bankers are reluctant to lend money or raise credit limits for just anyone, and they'll only lend money to borrowers with excellent credit scores.


There’s also a mistaken belief that where you live influences your credit report. Wrong. Where you live doesn’t influence your credit report. Your payment record does.

Pay your bills on time or ahead of time, have a reasonable debt load, and have a credit report free of unnecessary inquiries and bad information.  Your good payment record gets you faster approval and better interest rates. But to keep your credit report in good shape, you’ll have to continue to prove you have income, you’re still a responsible person, and a person that pays on time, all the time.

Today, over 150 million people in the United States have credit of some kind, either a mortgage, car loan, or credit cards. Right now, because of the economic crisis, about 80 million people are in a bad credit situation. It doesn't seem fair. And the sad part of this is that most of these people probably have jobs and were reliable, responsible people that paid their bills on time. But, in this economic meltdown, bad things happen to good people. In times like this, your FICO score can plunge overnight.

Be smart about your credit score, you can repair your credit quickly and easily. Get rid of the bad information, and replace it with good information; you'll be surprised how quickly your FICO score will improve.

 

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