We last left off wondering where to go for a reliable credit score. The best place to go for one is www.creditchecktotal.com. This site gives you all three scores and a report for $1.00. Make sure to read your report and check for errors. You need to sign up, but can cancel after two weeks so you don't get charged a monthly fee. This report is most accurate to within 20 points of your actual score. If you are getting ready to make a large purchase (house, car, boat, etc..) for $30-40 you can go to www.myfico.com to get your exact score.
Did you know that you have two scores? A general score and a more precise score. It's based on your purchase. Home loans will have the strictest qualifying score, car loans and credit cards - fair and loans for furniture/appliances the least strict to apply for credit.
Let's break the scores into segments:
760 - 850 A+ credit - best rated. You can get the best interest rates available out there.
720 - 759 A credit - pretty good. You will be able to get good, low interest rates
719 - 680 B credit - average with o.k. rates that aren't too high
679 - 620 C credit - less desireable credit where you will pay higher interest rates
580 - 619 D credit - bad credit with high interest rates, but you may still be able to get a loan
Generally speaking, a credit score of 620 is usually the cut off point for lenders. If you find that you are below that score, you may still qualify. If your score is 550 - 580, you HAVE to put 10% down on the home and cannot receive any funds from others as a "gift". It is always best to reach out to your lender.
Make sure to check your report - READ IT! You need to check your personal information to make sure it is all correct. Take a look at your accounts listed. Are they correct (balances, open, closed). Take a look at inquiries. This is very important. Why? Did you authorize those inquires? Or, did your information get stolen and someone else is opening or using your credit.
What if I don't have any credit? How do I establish credit? If you have a mortgage payment, great! That's a great start. If you don't then open 2 revolving credit cards (MC, Visa, Discover) and keep the balances low. Having an installment payment is also good to start credit, like a car loan or student loan.
NOTE: I am not a CPA, loan originator, credit specialist or attorney. This information is gathered from public data and through discussions with those involved in the loan and credit processes.