Understanding your credit score can be a compli cated and intimidating process. Your credit score can affect your ability to buy a car, purchase a home, open a line of credit or a new credit card. It can also affect how much you will pay in interest rates too. The good news is there are ways to improve less-than-perfect credit scores.
The first step in the process is making sure that you have a cur rent copy of your credit report. Congress recently amended the Fair Credit Reporting Act so that consumers may now receive one free credit report annually. There are three major credit bureaus: Equifax, Experian, and Transunion. Since entries can vary across bureaus, you’ll want to request a free report from each of the three companies. (Go to www.annualcreditreport.com for help doing this.)
It’s also important to know just what a good credit score is. Most A-Paper scores generally begin around 680. Mortgage financing generally begins at 640, although under specific circumstance, you might get approval with a score as low as 580. Don’t despair if you come up short, there is always room for improvement. Increasing your score just five points can save a significant amount of money.
Remember, credit scores don’t change overnight. Improving them requires time and diligent effort on your part. Addressing credit issues can be uncomfortable to say the least. But by taking these steps now, you’ll be that much closer to obtaining the home of your dreams.
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