| How to Learn about Your Credit Score, Part 1 |
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For many people, "What's your score?" has become a more popular phrase than "What's your sign?" although it will never be much of a pick-up line in a bar. It will, however, affect your life much more than your horoscope will. Your ability to get a car loan or a mortgage loan is affected by your credit score. How low an interest rate you will get on your loan is affected by your credit score. Many people are unaware that their credit scores may have resulted in their paying a higher interest rate on their mortgage loans than if they had a higher credit score. Telephone companies also use credit scores to determine whether to provide service and, if so, what deposit they may require. Your credit score may also affect how much you may be authorized to take out on a daily basis from your bank's ATM. Even when you apply for a job, your credit score is important. Some prospective employers equate bad credit with unreliability, regardless of your astrological sign. FICO credit scores range between 300 and 850. As so often is the case (with the notable exception of your cholesterol reading), the higher your score, the better. If your credit score is over 660, Freddie Mac, a company that plays an important role in the mortgage market, considers your credit score to be high enough so that you will be approved for most mortgage loans with only a basic review of your application. If your score is between 620 and 660, your score is more problematic and a more detailed review of your application will be required. A score of less than 620 results in a difficult time getting mortgage financing. A score of 666 may affect your credit in ways you can hardly imagine, particularly if you share the surname of Buffalo Sabres' professional hockey player Miroslav Satan, who of course places the emphasis on die second syllable of his name when pronouncing it. Scores above 720 can often work to your benefit as to the terms of your loan, such as a lower interest rate. In most states, whether you will be granted an insurance policy and at what cost is affected by your credit score, although there is a welcome trend among the states to limit the use of credit reports by companies selling homeowner's insurance and car insurance. For years, insurance companies have argued that, according to their secret formulas, a person's credit score has a direct relationship to the number of claims that they make on their insurance. Consumer advocates have responded by saying that this practice is spurious (a great word that is derived from the Latin word "spurius," meaning illegitimate or false) and discriminatory, particularly against poor people and minorities. |
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