Raise Your Credit Score For Your Financial Advantage
Credit granting policies seem to be getting tougher in these days of the credit crunch, so one of your tasks to implement regularly should be to raise your credit score. Most people don’t consider their credit score frequently or regularly, but not doing anything about it, year after year, is undoubtedly one of the worst things you can do.
This is particularly true for mortgage loans, where it was not all that many years ago when one could get approved for a very attractive mortgage loan at almost the drop of a hat. But this is also important for other types of credit like car loans, credit cards, bank loans, and more.
The major reason it is crucial to have your credit score as high as possible is because all lenders for extending you any kind of credit will look at your credit score and credit history so they have the ability to make a decision as to how much of a credit risk you might represent to them when they consider your loan request. The interest rates and incentives they will offer is largely dependent on how much of a risk they feel you represent to them, and that risk factor is determined in huge part by your credit score and credit history, as reported by the credit reporting agencies and credit bureaus.
Just as an example, consider the typical mortgage loan, which very likely amounts to a six digit figure for most mortgage holders in this day and age. The difference of about 25 points in your credit score might be the difference between getting an interest rate that is as little as a tenth of a percentage higher on the mortgage loan. Is a tenth or couple tenths of a percent a big deal? Over the life of the loan, even those tenths of a percent can add up to well over $10,000 more than you would have paid if you had taken the time to raise your credit score.
With regard to your credit score, there are some things listed on your credit report that you have zero control over, such as the amount of your income. You also have no control over the total amount of your outstanding debt, but here is where it gets dicey. The actual amount of your total outstanding debt may not be correct on your credit report.
In addition, the status of each of your financial obligations may not be accurately reflected either. Multiple studies have found that the majority of consumers have one or more errors in their credit report. These errors run the gamut of having accounts listed that do not belong to you, which is usual for people with common names. It may have a debt reflected as being past due when it really is totally up to date. It might have your balance listed as $8000 when in reality your balance on that account is $80. All of these errors compound into producing a credit score for you that is lower than it should be if things were reported accurately.
Your first step in raising your credit score is to obtain a copy of your credit report from each of the three major credit reporting bureaus. Look them over with a fine tooth comb and then begin the dispute process with the credit bureaus for anything that is not totally accurate. The credit bureaus have a legal obligation to either verify the information as correct, correct it, or sometimes even remove it.
Don’t become a victim of your own credit score. Take the time to raise your credit score and make it a regular part of your regular financial responsibility tasks. The money you save will serve a much better purpose in your own pockets than it will being paid out in loan payments.