Just How Important is Your Credit Score? (Hint: Very Important)
Janna's Blog
- Posted:
11/20/2007
If you don't, you’re not alone. It’s strange how we know our height, weight, date of birth, and other vital statistics, yet so many of us don’t know the number that defines our place in the financial world.
Borrowing money is a fact of life. Few of us have enough liquid assets to go and purchase homes and cars outright, not to mention education and other hefty expenses. If you have a low credit score, you’re not only at risk of being denied loans and credit cards, you’re also at risk of being turned down for jobs or housing. Members of the military can’t get top security clearance levels with poor credit. Even if borrowers with low credit manage to get approval for loans, they face exorbitantly high interest rates. When lenders see low credit scores, they assume they’re taking a risk by lending to a sub-prime borrower. They will make up their potential losses through interest.
What is low credit? Scores of 699 and below are considered sub-prime. Scores of 700 to 850 are the highest and most desirable. They will get the best interest rates. The difference is in the details, and what a difference those digits make! A home buyer with a credit score of 699 will pay, on average, $277 more each month than a home buyer with prime credit, according to FICO - a financial model from the Experian credit bureau. How much more gets wasted on sub-prime credit card and loan interest?
To find out your credit score, contact Experian, TransUnion and Equifax. Be sure to request your credit history
and your credit score. Then pay off your delinquent balances and dispute any mistakes you find. All this will cost money, but think of it as an investment in your financial future.
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