The score I am referring to is not your grade point average back in high school, and it’s not how many times you called in sick at work. It’s a score that will be following you around through thick and thin. Think of it like a marriage that doesn’t have a 55% divorce rate. It’s your FICO score; which is an acronym for Fair Isaac Credit Organization. The higher your FICO the less you will have to pay on any kind of credit services such as: credit cards, mortgages, and personal loans. A FICO score represents your credit history that is monitored by three separate credit bureaus (TransUnion, Experian, and Equifax).
The highest score possible is an 850 while the lowest is a 300. The FICO score is roughly put together using this formula: 35% punctuality of payment in the past, 30% capacity used: the ratio of current revolving debt (credit card balances, etc.), total available revolving credit (credit limitations), 15% length of credit history (how long credit you have been using credit), 10% types of credit used (installment, revolving,), and 10% recent search for credit and/or amount of credit obtained recently.
Knowing your score before you apply for a loan can save you hundreds of dollars monthly, and thousands yearly. Here’s a quick example of a 30 year fixed $100,000 mortgage having two different credit scores: A score of 760 and above, your avg. payment would be 632.07(using 6.5%), but having a credit score of 620-639 your avg. payment would be 740.05(using 8.09%). A difference of nearly $1300.00 a year. When you apply for a loan this score will cut your shopping time by 75% because you will know a ballpark range of the interest lenders will offer you. If you don’t know your score find it out now. Go to myFICO and start saving money!
Why It Saves to Know Your Score
September 21st, 2006 at 11:20 pm