Did you know that there are two common credit score rating systems? Consumers need to understand which rating system is they are looking at or is being used to understand what constitutes a good score.
Since rating systems use different scales, it's not a comparison of apples to apples.
FICO scores, commonly used by banks, range from 300 to 850.
A score of 760 or above is considered ideal.
VantageScores, used by the three major credit reporting companies, have a range of 501 to 990.
Researching the tricks of the trade and maintaining a good credit scores doesn't just give you security when you need to apply for a loan, it can save you lots of money.
Consider this: Have you seen those zero percent interest offers on car loans "for qualified buyers?' Qualified buyers are those with higher credit scores.
The difference between a zero percent and four percent interest rate on a five year car loan can be thousands of dollars.
Consumers with higher credit scores can also get lower annual fees.
So what can you do to raise scores and save money? It's not always obvious.
Common sense: Pay all bills on time.
Paying bills on time is still a necessity.
Wouldn't it be nice if all of the strategies for keeping up or raising your credit score were simply a matter of common sense? It's just not the case especially with all of the changes in the credit card world.
There are some surprising practices that seem to be good common sense that can actually work against your score.
So people have been surprised when their score dropped after applying for the Obama Affordable Mortgage Program.
This is not the only surprise out there for consumers trying to raise their credit scores.
Are you at risk for these credit score droppers? Considering closing a credit card? Since the Card Act closed the door to many of the credit card company's fee policies, many credit card companies opened a few new windows.
Some credit card companies have added new fees like inactive account fees or annual fees.
If you don't want to agree to these charges, should you close your account? Applying for a new card? Since part of your score depends on you available credit limits, closing the accounts can lower it.
You can apply ahead of time for a replacement card but experts warn not to apply for more than one card every six months so make your changes gradually.
Considering leaving a small balance? Paying off a credit card seems like good common sense doesn't it especially if you want to close the account? However, another part of your score depends on how much of your credit you are using so if you pay off the balance, that amount of credit falls off of your score.
Even if you close an account, that amount of credit will still be applicable as long as you have a balance.
It's amazing the difference a little bit of this or a little bit of that on your credit card activity can make on your credit score.
The important thing is to monitor not only your score but your activities that may put your credit at risk.
Since rating systems use different scales, it's not a comparison of apples to apples.
FICO scores, commonly used by banks, range from 300 to 850.
A score of 760 or above is considered ideal.
VantageScores, used by the three major credit reporting companies, have a range of 501 to 990.
Researching the tricks of the trade and maintaining a good credit scores doesn't just give you security when you need to apply for a loan, it can save you lots of money.
Consider this: Have you seen those zero percent interest offers on car loans "for qualified buyers?' Qualified buyers are those with higher credit scores.
The difference between a zero percent and four percent interest rate on a five year car loan can be thousands of dollars.
Consumers with higher credit scores can also get lower annual fees.
So what can you do to raise scores and save money? It's not always obvious.
Common sense: Pay all bills on time.
Paying bills on time is still a necessity.
Wouldn't it be nice if all of the strategies for keeping up or raising your credit score were simply a matter of common sense? It's just not the case especially with all of the changes in the credit card world.
There are some surprising practices that seem to be good common sense that can actually work against your score.
So people have been surprised when their score dropped after applying for the Obama Affordable Mortgage Program.
This is not the only surprise out there for consumers trying to raise their credit scores.
Are you at risk for these credit score droppers? Considering closing a credit card? Since the Card Act closed the door to many of the credit card company's fee policies, many credit card companies opened a few new windows.
Some credit card companies have added new fees like inactive account fees or annual fees.
If you don't want to agree to these charges, should you close your account? Applying for a new card? Since part of your score depends on you available credit limits, closing the accounts can lower it.
You can apply ahead of time for a replacement card but experts warn not to apply for more than one card every six months so make your changes gradually.
Considering leaving a small balance? Paying off a credit card seems like good common sense doesn't it especially if you want to close the account? However, another part of your score depends on how much of your credit you are using so if you pay off the balance, that amount of credit falls off of your score.
Even if you close an account, that amount of credit will still be applicable as long as you have a balance.
It's amazing the difference a little bit of this or a little bit of that on your credit card activity can make on your credit score.
The important thing is to monitor not only your score but your activities that may put your credit at risk.
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