Down To Earth Personal Development

What is your credit score?  If you don’t know your credit score, it’s time to find out.  In this article we’ll give you some very good reasons for knowing how you rate with creditors, and how to monitor your credit score.

First, a little background.  Your credit score is based on information about you from companies that gave you credit in the past.  They report on your payment history to the three major credit reporting bureaus, who then create a numerical score, sometimes call a FICO score (it’s named after the Fair Isaac Corporation).

You can think of your credit score like grades on a test in school.  The higher your score, the better your credit rating.  FICO scores range from 300 to a perfect 850.  Anything under 700 is in need of some improvement.  So why should you care?

Reason #1: A more affordable mortgage.  A higher credit score will get you a lower rate on your home loan.  Particularly in these days of tightening credit, banks pay close attention to your FICO score when you apply for a home loan.  Just a 2% reduction in the interest rate on a 30 year fixed mortgage on a $200,000 home will save you nearly $100,000!

Reason #2: Lower insurance premiums.  Many auto insurance and health insurance companies check your credit score before they set the premium on your insurance.  They have found that people with a higher FICO score are less likely to file a claim against their policy.  So, they reward customers with better credit by offering them a lower premium on life, health, and auto insurance.

Reason #3: A better job.  It’s true.  More and more employers are checking your credit report when you apply for a job.  While they may be getting the report to verify the information you put on your job application, what’s to stop them from seeing how you handle your financial affairs, too?

So, many more aspects of your life are being affected by your credit score than you might have imagined.  Raise your score, and you may well raise your standard of living through lower interest rates, a better job, and a more affordable lifestyle.  Back to the original question:  What is your credit score?

It’s easy to get a copy of your credit report.  In fact, you are due a free copy each year from the three major credit reporting bureaus.  Just log on to annualcreditreport.com (this is a web site supported by the credit bureaus).  It is entirely your choice whether you order all three credit reports at the same time or order one now and others later. The advantage of ordering all three at the same time is that you can compare them. However, you will not be eligible for another free credit report for 12 months. On the other hand, the advantage of ordering one now and others later (for example, one credit report every four months) is that you can keep track of any changes or new information that may appear on your credit report.  It is important to monitor your credit report, since it does change over time as your lenders send new information.

Note that your free credit report will not contain your FICO score.  The three major credit bureaus (Equifax, Experian, and TransUnion) will be happy to sell you that piece of information, as will any number of other web sites.  Shop around for the best deal, and don’t get hooked into signing up for a monthly service.

This article is brought to you by The Credit Secrets Bible

Tags: Credit Repair, Credit Score

When our parents were young, living beyond their means would be equivalent to taking a vacation they couldnít afford.  Today, it is quite different.  Taking long trips abroad, buying cars and jewelry would be considered normal for many people.

We all want what we can’t have.  Sure, some of us would love to retire and not have to worry about paying off the mortgage or similarly, move to another state and begin a new life free of debt.

When we play the weekly lottery, we are hoping against hope that we’ll win for no other reason than we would love to buy a new home for mom and dad, send the kids to college, pay off the car loan, or travel to anywhere.

The reality is we are much more likely to be struck by lightening than win the lottery.  Oddly enough, it may take a bolt of lightening to bring us back to reality.  Fantasy Island was just a show, but for some, it is living a life that is in complete contradiction to the balance sheet in oneís life.

There are so many people in debt today and the numbers are growing.  When the sub-prime mortgage debacle occurred, most of the individuals affected were the unfortunate victims of unscrupulous characters who sought to make a quick buck.  For others, buying a home that was far beyond their ability to pay put them in dire straits.

People who live beyond their means have no conception of money.  An example would be someone who was brought up in a poor household.  He probably swore that some day anything he desired would be his.  Conversely, another person who grew up in a similar situation may be a saver - prepared for any eventuality, yet living comfortably and modestly.

If our parents couldn’t afford to buy something, there was no discussion or compromise, it just wasn’t purchased.  Today, with credit card applications offering zero interest, with incentives from mortgage companies and banks, with infomercials claiming, “You, too, can become rich and live in luxury for the rest of your life.”, it’s no wonder we have become a nation in debt.

Every day, there is one ad or another in a local newspaper or online offering a quick and easy way to earn thousands of dollars.  Yes, we all want what we can’t have.  If you think about it psychologically, it is the quest that is enticing:  the journey to fabulous fortunes that is luring individuals to stray from what they know is the truth.

Living beyond one’s means is a problem for many, but the bigger problem lies at the end of the quest when the bills start rolling in and there isn’t enough money in the budget to pay the debts.

Tags: Personal Finance