Credit Score Secrets Revealed
For many, a personal credit score is an otherworldly piece of information that can make a huge financial difference in life. However, credit scores remain elusive to most, because the interpretation of this three digit number varies across multiple lenders. The following reveals how many lenders grade this number when determining your credit worthiness.
You can rest assured that your score will have an impact not only on if you get credit, but more importantly, how much you will pay for it. Credit scores are graded much like a report card-A through E. The example chart below shows that credit scores in the "C, D, or E" range will pay higher interest rates on loans, than those in the "A or B" range. For example, a $20,000, 48 month car loan at 5.25% would cost an "A" borrower approximately $3,418 less in interest than the same deal would for an "E" borrower. Borrowers with lower credit scores may also be required to front larger down payments and accept smaller overall loan amounts to get their deal done.
Now that you know one of the secrets behind credit score grading, the best thing you can do is to manage your score relative to your individual situation.
Here are a few proven methods—
- Pay on time. Expect instant score rebound when you become current.
- Maintain your capacity. Having enough available credit helps increase your score.
- Build your credit. Keeping your accounts active over longer periods of time improves your score.
- Refrain from requesting credit. The more you ask for credit, the lower your score will go.
- Mix it up. For a better score, maintain a good level of mortgage, installment, and revolving credit.
It takes time to rebuild from setbacks like bankruptcy and foreclosure. For help, call 800-234-0729.