Know your credit score! healthy life ct


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Know your credit score! healthy life ct

  1. 1. Web Search by YAHOO! Businesses body mind spirit healthyhomeKnow Your Credit Score!Karen PasacretaUpdated 06:10 p.m., Thursday, March 29, 2012The impact of your credit score is huge. It helps banks decide if they’ll lend to you and if your score is low, it can really hinderyour opportunities. Photo: Silhouette © Photoeuphoria/HL Illustration, / Its so easy to get into debt trouble. Loss of a job, a 0 0 1 1 difficult divorce, or even one incredible shopping trip Like Share and before you know it, youve maxed out your credit card at an interest rate you cant afford. Paying it off Larger | Smaller Email This could take 20 years or more if youre just doing Printable Version Font the minimum. Kathleen Kodan found herself in this predicament.After inheriting some money, she purchased her Shelton condo outright with cash. She had nodebt and excellent credit. "I started to get lazy with my credit cards," says Kodan, who is ondisability with little income. She was charging everything. Before long, she owed close to$50,000. Her debt-to-credit card value, or how much she owed compared to her debt limit onher card, was so high her credit score took a big dip down.WHAT IS A GOOD CREDIT SCORE?"It used to be 680 would be good enough," says JoAnn Sabas, loan officer at Milford Bank. "Butnow with all the bad loans and all the things that happened with the housing market, FannieMae changed the requirements." (Fannie Mae is the Federal National Mortgage Association,which backs or secures the majority of mortgage loans written in the United States.)Now, 740 is considered a good score, but Sabas has seen scores as high as 840. Scores between
  2. 2. 300 and 600 are generally considered poor; scores above 600 up to 700 are fair; and scoresfrom 700 to 800, or higher, range from good to excellent.Your score is determined by sophisticated mathematical software -- using complicatedalgorithms -- that evaluates all of the information on your credit report. Thats your entirecredit history. In other words, every credit card youve ever owned or applied for and everyloan youve ever taken out or applied for is on that history.The most popular scoring method to rate your credit is known as the FICO score or Fair, Isaacand Company, a now-publicly traded scoring company founded in 1956 by engineer Bill Fairand mathematician Earl Isaac. "Three bureaus make up a FICO score: Experian, Equifax andTransunion and each one interprets data differently," says Mark LeClaire, professor ofeconomics and department chairman at Fairfield University. "Some places might just ask forone, but if you are buying a home, (the lender) should ask for all three."Under the FICO model, each bureau has its own scoring formula and the scores from each willgo into the overall FICO equation. However, a new risk-scoring model, called VantageScore,could close the complicated gap on the variance in the three scores -- if it catches on withlenders. It is the first major collaborative effort among the three bureaus to create a unifiedscoring model, using the same formula at all three bureaus. In theory, the three scores willbe identical.No matter what, youd better hope your score is high because it "predicts your creditworthinessas a consumer," says Christine El Eris, a credit expert in Stamford who also speaks at nationalindustry conferences. The impact of your credit score is huge. It helps banks decide if theylllend to you and if your score is low, it can really hinder your opportunities.Nowadays you need excellent credit to qualify for a loan, like a mortgage or a debtconsolidation. The higher your credit score, the better your position to shop around for the bestrates. Credit scores also are used for things that may surprise you, like auto insurance rates oreven employment. "Companies do have the right to pull your credit as long as you sign off onit," says Michele Blanchard, certified financial planner and divorce analyst in Danbury. "Theycan pull it at any time and use that to take into account whether you are a good candidate fora promotion."GET YOUR FREE CREDIT REPORT 1 | 2 Next » Printable Version Email This Like Tweet 0 0 Share© 2012 Hearst Communications Inc.