When you apply for a loan from a creditor, one of the first things that he will want to see is your credit score. If it is not high enough he may refuse you the loan outright. Alternatively, he may give you the loan, but at onerous interest rates or conditions.

When looking for a mortgage, your credit score may determine whether you end up paying $800 a month for your mortgage or $1300 a month. Over the span of a lifetime, a poor credit score can cost you hundreds of thousands of dollars. That’s why it is so important to keep track of your credit score.

You can get credit reports from each of the three main credit reporting agencies. Unfortunately, your FIFO score does not automatically come along with your credit report. To get your credit score, you have to request it specifically from the company and you will most likely have to pay a fee as well. The reason for the fee is simple. The credit reporting agencies, as a way of making money, simply treats the credit score fee as a profit center. When you send for you credit score, request it from all three agencies. The reason is that all three calculate the score a bit differently.

The cost for having a credit reporting agency send you your FIFO score is not expensive. But, one way of avoiding the charge altogether is to get it directly from the lender from whom you are trying to get a loan. For instance, as mentioned above, when you apply for a loan, your lender will ask the credit reporting agency for your credit report and your FIFO score. This means that when you return to find out whether you have the loan or not, he knows your credit score. Simply ask him what your score is. Most will give it to you with no problem.

You may be surprised at all the things that your FIFO score impacts. You know, of course that it affects loan interest rates. But what you may not know is that it also affects your home and auto insurance rates. Your score affects whether you will have to put down a deposit when you sign up for a home utility such as gas or electrical. In short, it impacts, so many things that you would be foolish to ignore the power that it wields.

Q. I am 67 and retired. I have an American Express gold card and an American Express Hilton branded card. I would like to cancel the gold card and retain the Hilton card because the gold card costs $110 per year and we rarely use it anymore. I’ve had the gold card since 1971 and the Hilton card is newer, since 1988. My credit scores are 765 to 800 and we have no credit card debt or mortgage, just an $11,000 car loan and a $28,000 home improvement loan. How much of a hit do you think I will I take if I cancel the gold card?

A. For you, the hit should be minor and temporary. Still, there are considerations to make before you cancel.

Ask yourself if you’ll be applying for any major loans, such as a mortgage or car loan, in the near future.

“You might want to keep the card until that credit is obtained to get the best possible rate of interest on the loan,” said Jody D’Agostini, a certified financial planner with AXA Advisors/RICH Planning Group in Morristown.

Take out any loans first because canceling your oldest card will have an effect on your length of credit history, which makes up about 15 percent of your credit score. Keeping the oldest card is good for that part of your score, but given the rest of your credit history, it sounds like you’d make up any decline rather quickly.

“The nick on your credit should be minimal, and as long as you continue to pay your bills in a timely fashion, then you should have little cause for concern,” she said.

If there was no annual fee, D’Agostini said she’d recommend sticking the card in a drawer and not using it, though sometimes inactivity will cause the lender to close the line of credit.

Although you’d be closing your oldest card, you still have the Hilton card, which goes back to 1988 — not bad and certainly proof of a long credit history.

Something else to consider before closing the card is your credit utilization ratio, which compares how much credit you have available and how much you’re actually using, said Michael Gibney, a certified financial planner with Highland Financial Advisors in Riverdale.

Gibney said closing the card will lower your available credit, and together with your outstanding auto and home improvement loans, your credit utilization will move higher — and higher in general is bad for your credit score.

This again, given your overall solid credit history, will be a temporary hit.

“I agree with canceling the gold card because of the annual fee,” Gibney said. “I find it hard to justify an annual fee on a credit card because there are many offerings available with no annual fee.”

Source: nj.com

The credit score is often the determining factor when it comes to getting approved for a loan or mortgage. For those who do get approved, the score can determine the interest rate that is charged. Having a score just two small points below the threshold for the best rates can cost an individual thousands of dollars. Following some tips for raising your credit score will help prevent that from happening.

Raising the score takes time and any attempts at quick fixes can easily backfire. The key is for an individual to practice responsible credit management over a long period. There are online calculators, including one provided by FICO, one of the major entities that determine credit scores. Reviewing these tools will illustrate just how much money individuals can save by improving their credit scores.

The most obvious way to improve the score is to pay bills on time. The longer period the bills are paid timely, the better the credit score will be. If an account goes into collections, subsequently paying it off will not remove the account from a credit report until seven years have passed. Therefore, individuals should contact the creditor once it is determined that the account cannot be paid on time to see if alternate payment arrangements can be made.

Additional guidelines include keeping outstanding credit card balances low and paying off debt rather than juggling it between cards. Individuals should not close cards in order to raise the score or open cards in order to increase credit. Those new to managing credit should not open a lot of new accounts too quickly because this act will lower the average account age and could make the individual appear as a credit risk. Being considered a risk is worse than the alternative of having little credit information.

Paying bills on time in order to avoid delinquencies or a collections situation is a good way to positively impact a credit report. Other tips for raising your credit score include maintaining low credit card balances and avoiding the act of shifting debt. In addition, exercising good judgment when opening and closing credit card accounts will have a positive impact on the credit score.

Do you need a home, car or other type of loan but have poor credit? Well, it is possible to get an Adverse Credit Loan You can also find out how to get poor credit credit cards to give you a line of credit and improve your credit score.

Individuals who possess a good credit score always heads to the finish line first. They are eligible to loans and other forms of credits of lower interest rates and convenient terms of payment. Their good credit score serves as their assurance to the lending institution that they are not of credit risk and they have the capability of repaying any forms of credit that they will avail without committing delinquencies. Thus, individuals with good credit score have the access over loans and other forms of credits of lower interest rate payments and best credit terms.

On the other hand, if you possess a bad credit score, expect that you will experience difficulties in securing loans and credit plans of lower interest rate. Your bad credit score makes you a financial risk on the part of the lending institution, thus you are only entitled to loans and other forms of credit with higher interest rate so that the lender will have an assurance that the amount of money you borrowed will return back to them at the end of the loan term.

This could be a huge financial setback for your part and will really hurt your pocket. Higher interest payments mean fewer savings for your part and will cost you more than the actual amount you borrowed from your lender. At this point, you should realize the importance of possessing a good credit score if you have plans of getting loans and other forms of credit in the future.
To have an idea of what a good credit score is, you should be aware of its range, or what you call an “acceptable credit score range”. It is commonly determined using the national average credit score. In addition, the national credit score could definitely say something about how a nation handles its financial matters.

The typical national credit score range is between 650 and 700. This would now be your basis whether your credit score is above or below the national average. For instance, if your credit score is below the national range, then something should be done in order to improve your credit score. On the other hand, if your credit score is above the national range, then you are safe enough in applying for loans of your choice without the fear that your loan application might be rejected later on.

Remember that you need to stay close within the national average credit score so that you will not experience difficulties in applying for loans with lower interest rates. Credit score above the national average means something and can affect the way you will deal with loans and other forms of credit in the future. As previously mentioned, it will improve your chances of securing loans or credit cards with lower interest payments, which in return could generate substantial amounts of savings in the long run. Staying close on the acceptable credit score range will help you in making decisions and not regretting the results later on.

Be responsible enough in your personal financial matters. Knowing the national range and staying close to it will give you the advantage of securing loans or other forms of credit and at the same time generating substantial amounts of savings in the long run. You are just like setting your mind on something that you know will give you benefits in the future.

And that is a great thing for you to consider.