How Important Is It to Monitor Credit Score

What is the fuss about credit score? If you are not aware about your credit score, it is high time you check out now. We will now analyze why you should always keep track of your credit ratings, and how to monitor your credit score.

First up, a brief introduction. Your credit score is decided based on record about you from lenders that have financed you so far. They submit information on your payment history to the three major credit reporting bureaus. These organizations then make a numerical score, also referred to as a FICO score (named after the Fair Isaac Corporation).

Think about the grades you were awarded in school exams, your credit score is similar to that. Credit rating increases in direct proportion to increase in credit score. FICO scores cover a range from 300 to a perfect 850. Anything below 700 needs to be improved. Why should you bother then?

*higher loan at lower costs
A higher credit score will fetch you home finance at lower rate of interest. Especially in these days of tightening credit, banks give a very high weightage to your FICO score when appraising a home equity loan. For example if you manage to get a reduction of just 2% in interest rate on a 30 year fixed mortgage on a $200,000 house you will save almost $100,000!!

* Less insurance premiums

Your credit score is verified by many auto insurance companies and health insurance companies to work out your insurance premium. Statistics suggest a definite relation between FICO score and insurance claims. So, they reward customers with better credit by providing them a cheaper premium on life, health, and auto insurance.

*A better job
Increasingly employers are ascertaining your credit reports of prospective employees. Although it is done to cross check your application, credit report will speak out your financial history also.

It only goes to show that credit score affects our life in many ways. One thing for sure is that better score will help you raise your living standard with cheaper interest rates, a better job, and a more affordable lifestyle. Back to basics: What is your credit score?

It is easy to procure a copy of your credit report. On the contrary, each of the three major credit reporting bureaus is bound to give a copy free of cost every year. You can do so on the web by visiting annualcreditreport.com This is a web site supported by the credit bureaus. You can opt to get a copy from all three at the same time or prefer to get on form each of them at different times of the year. One distinct advantage of obtaining the report simultaneously is a better comparison. All the same, you will not be eligible for another free credit report for 12 months. You can keep track of changes in a better way if you opt to receive them over the year. It is crucial to follow your credit report, because it is modified over time as your lenders provide fresh data.

One note worthy piece of information is that your free credit report will not disclose your FICO score. The three major credit bureaus (Equifax, Experian, and TransUnion) will be pleased to sell you that bit of data, like many other web sites. Beware about all offers coming your way like monthly reports but for a subscription.

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Continue at these blog posts - credit scores for mortgages and free eqifax credit report score.

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