Your credit score is an integral part of your financial life. It is important that you understand what it’s all about. Lenders, landlords, insurers, utility companies and even employers look at your credit score. It is derived from what’s in your credit reports, and it ranges between 300 and 850.
Yet, according to a survey that was recently conducted, nearly half of all Americans don’t know how these scores are derived or even what factors are used to come up with them.
For example, if your credit score is 580 you are probably going to pay nearly three percentage points more in mortgage interest than someone who had a score of 720.
Or another way of looking at it, if you had a $150,000 30- year fixed-rate mortgage and your credit score was good enough to qualify for the best rate, your monthly payments would be about $890. This is according to Fair Isaac, the company that created the FICO score and who the rate is named afte (Fair Isaac COrporation). If your credit is poor, however, it is very likely that you would have to pay more than $1,200 a month for that same loan.
With so much depending on the credit score, its important to...
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