We've long heard that banks and credit card issuers check your credit score in the loan approval process. But did you know that your homeowners and auto insurance companies check it as well? It's true. Sources say that your credit score can somehow reflect on the risk a company takes to insure you, and how likely you are to have a claim. There is a new wave of change crashing over the credit industry and it's based on secret enhancements to systems that generate your credit score. And if yours isn't good be prepared to get a quick "no" or pay a lot higher interest rate.
The latest to enter this fray is none other than the good ole USA. Through the now government owned Freddie Mac and Fannie Mae, who by the way lost $8.5 Billion in the third quarter this year, have released news of a impending new policy to add a "surcharge" interest increase on home mortgage offerings based solely on your credit score. There are three credit rating agencies and they take the lowest score of the three. Then, based on that score, they will add between 1/4% and 2.75% to your interest rate. A 5% rate could become almost 8% just based on your score! It doesn't matter how much you make, how much you have, or how nice your home is. Just that number.
Check out:
http://www.get-my-credit-reports.com/
While I am not advocating any particular site, this one does offer a lot of information for free, with the normal pay service offerings there as well. There are many good sites to Google to help you work on managing and fixing your credit.
Credit scores, as I have said for sometime, should be more coveted than our social security numbers. We should protect them as if they are gold plated. Payments should always be made a day early, instead of a day late if possible. We don't know how the software operates to generate your score. We do know a few items of it though: like the number of times you let credit cards, and car dealerships pull your credit hurts you. Your payment history is probably the biggest one, followed by how much debt you have, even if you are making your regular payments on time. Lastly, credit scores fall quickly, and getting them to come back up is like climbing Mount Everest.
Please keep this in mind as you enter the new year. Be mindful of holiday spending. Check out LifeLock online, and have them lock your credit so no one can pull your credit without your written authorization. Sign up with a qualifying account for our Business or Personal Finance Works at Mainstreet, which is currently free. Its as easy to make a budget and manage your finances on our site as it is to swipe a card, but much more profitable to you for years to come.
D
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