A lot of people don't realize how important their credit score is. It affects a lot of things in your life. Some employers even check your FICO Credit Score as part of a job interview. Landlords check it before renting you a home. Mortgage lenders base your interest rate on your Credit Score. Most people don't choose which house to buy based on purchase price. They base it on how much money they are going to have to pay every month to live in that particular home. The lower your Credit Score is the higher your Interest rate will be which means the higher your monthly mortgage payment will be. But there is good news. There are many ways to improve your Credit Score and some of them are very simple.
The article below was written by "The Standard" and distributed by the Florida Association of Realtors. I did not author it. I am not claiming credit or responsibility for the content.
Stay current with creditors tracked by credit score firms, but also do some homework: Understand credit scores and how they impact your life.
NEW YORK – Good credit opens doors. Not only can it help you secure an affordable loan, but it is also often needed for access to open everyday accounts, such as for your utility services and cell phone. It can help you land a job, boost your chances of securing an apartment, and even improve your dating prospects, according to research.
Whether your credit is “good” is determined by your credit history, which looks at your payment patterns over time and your credit score, which rates your credit risk at a moment in time. But it’s more complicated than that, and if you’re like many Americans, you may be confused by some of the details.
According to a recent Freddie Mac survey of homeowners and renters, one in three Americans isn’t aware that credit score elements such as the length of credit usage or having joint credit and loan accounts are reported to credit bureaus. Additionally, more than half of homeowners and renters aren’t aware that being behind on housing payments can result in an impaired credit rating, and nearly 60% don’t know or realize it can impact their ability to get a loan in the future.
To get a handle on your credit, consider these tips:
1. Pay on time. The best thing you can do to build, maintain or improve your credit is pay bills on time. The types of accounts considered for credit payment history include:
- Credit cards
- Retail accounts, such as credit cards from department stores
- Installment loans, such as car loans, on which you make regular payments
- Mortgage loans
- Student loans
- Finance company accounts, such as car dealer in-house lenders
2. Watch your credit card balance. If you allow your credit cards to reach high, unpaid balances, or if you only pay the minimum due, credit cards can cost you hundreds (and even thousands) of dollars in interest and can impair your credit.
3. Review your credit report annually. You’re entitled to receive a free copy of your credit report each year from each major credit bureau via annualcreditreport.com. You can also keep an eye on your credit score through free apps such as Credit Karma, NerdWallet, WalletHub or others. Be aware, however, the scores shown in these apps are not the same as FICO scores used by most lenders and creditors to make lending or credit decisions. Still, they’re useful for reviewing the financial activities affecting your credit.
4. Get savvy. Education has power. Learn more about managing credit by checking out Freddie Mac’s free suite of financial education resources, CreditSmart. Over the past two decades, more than 5 million consumers have benefitted from these tools and now this program can be customized by users.
“Financial education is personal. Whether you’re renting a home, are on the path to homeownership or saving for the future, our newly released curriculum empowers you to customize your experience and learn at your own pace,” says Cindy Waldron, vice president, Single-Family Housing Insights and Solutions at Freddie Mac.
The impact of good credit on your life can’t be overstated. Use free resources to learn more about how it works. Then, stay on top of your credit by actively monitoring it and working to improve it.
