Don’t Be an Ostrich: Get Your Credit Report and Do Something About It

Written by Posted On Thursday, 19 November 2015 08:09

This article was originally published on mortgages.com.

Do you know your credit score? Unless you recently applied for a loan, probably not. Fun Fact (or maybe not so much fun, depending on how you feel about these things): Your credit score is determined by software company based in San Jose, California, named FICO, founded in 1956 as Fair, Isaac and Company. Lenders use it to help determine their risk before they give you a mortgage, a home equity line of credit, or any loan.

Knowing your score before you apply for a loan can give you some idea of what lenders will see when they consider your application. A higher score can mean lower interest rates, or even more money. A lower score doesn’t mean you won’t be approved, but the terms of your loan may not be as beneficial as you’d like. Lucky for you, there are steps you can take to improve your score, or maintain it if it’s already high.

Keeping track of your score can alert you to any potential problems with your accounts. One woman realized there was a problem when her score dropped from above 700 to the mid-600s. A little sleuthing yielded the information that her payment in full of an account with an appliance store had arrived one day late, resulting in a $20 late fee that was by then three months overdue, even though the original balance had been paid. Had she not checked her score, she might never have known about the late fee, and the situation could have been far worse.

Seeing your score rise can let you know it might be a great time to refinance your home and get a better rate than your original one, or to apply for a home equity line of credit (HELOC) to save for a rainy day (or build a deck for a sunny one). A rise in your score can also reassure you that you’re on the right track.

How can you keep track of your score? There are plenty of options online that allow you to check it for free, though you may end up on a mailing list or five. Or you could consider getting a credit card through Barclaycard, who offers free credit scores to members. You can access your credit score any time through their mobile app.

However you get your score, don’t put your head in the sand like an ostrich. Know where you stand, and know what your score means.

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