This is a question we are constantly contemplating. A “good” credit score can vary depending on the purpose it is used for. Nowadays, credit scores are pulled for much more than car loans, mortgages and credit card applications. Credit scores are pulled by insurance companies to determine your rates, utility companies to determine if you need to pay a deposit to utilize their services and even certain companies are pulling credit reports to determine if they will hire a candidate. With such a wide impact on your daily life, how can you be sure that your score is “good”?
Who determines your credit score?
It’s important to know who is calculating your credit score. The three power-house companies reporting your credit score are Experian, Equifax and TransUnion. They gather this information from various companies with which you conduct business. They know how long your accounts have been open, how much you owe, how often you have paid and whether your debt has been paid on time. They use this information to create your credit score. Their calculations are slightly different so while one company may have you listed with a 780 credit score the other may have you listed with a 790 credit score. Companies you conduct business with may pull your credit score from one or all three credit reporting companies.
You may have heard about a credit score, and the common FICO score. If that isn’t confusing enough, now there is also a Vantage Score. So, how do you know which score is being used by a certain company? There is only one way – by asking. Whether your score is pulled using FICO, Vantage or an industry specific score, the number is likely to vary based on the type of score that is pulled and which credit reporting agency is providing it. For example, Experian’s “Good” FICO score range is 670-739, while Experian’s “Good” Vantage score is 650-699. You can see how the type of credit score a company pulls can determine whether the number is actually higher or lower than what you may have thought.
How can I improve my credit score?
The higher your credit score the more likely lenders are willing to give you not only a loan but also the best interest rate they have available for your financial circumstances. So while saving up to buy a house or even a car, be sure to monitor your credit score. To assist in improving your credit score there are a few things that you can do for a faster impact. Pay your bills on time, keep your credit card balances low and try not to open additional credit cards unless they are an absolute need. Check your credit report for accuracy. All three credit reporting companies offer consumers one free credit report annually. If you find inaccurate information contact the credit reporting company and request that they correct it. This alone could have a positive impact on your credit score.
You may also decide to sign up for a credit monitoring service. Many consumers find these helpful as they alert of inquiries, potential fraud issues and/or any changes in their credit scores. There are many credit monitoring services available, it is best to research them and see which one best fits your needs.
As you can see, having a ‘good” credit score can impact many aspects of your life. Be sure to monitor your score regularly. Your credit score can save you thousands of dollars in interest rates on loans, especially when making large purchases such as a home. Mortgage rates rise and drop as the market flucuates. The same goes for other loan types and the interest rates available to you. The better your credit the more likely you are to receive an ideal interest rate. A small percentage could mean a big difference in your monthly payment amounts.
To find out if you qualify for a new mortgage loan or to refinance your current mortgage, talk to the lending experts at Lenox/WesLend Financial or call 844-225-3669. As heard on the radio, it’s the biggest no-brainer in the history of mankind.