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Your Goal This Year: Raise Credit Score

Apr 16, 2008
Credit granting policies seem to be getting tougher in these days of the credit crunch, so one of your tasks to implement regularly should be to raise your credit score. Most people do not think about their credit score frequently or regularly, but not doing anything about it, year after year, is undoubtedly one of the worst things you can do.

This is especially true for mortgage loans. It was not all that long ago when you could get approved for a very attractive mortgage loan with zero problems. But increasing your credit score is also important for other types of credit that you probably have, like car loans, credit cards, bank loans, and more.

The reason it is important to have your credit score as high as possible is that almost all lenders for any kind of financial transaction will look at your credit score so they can make an informed decision as to how much of a credit risk you may represent to them when and if they approve your loan request. The rates, programs, and incentives they will offer you is very dependent on how much of a risk they think you represent to them, and that risk factor is determined for the most part by your credit score.

Just as an example, consider the typical mortgage loan, which very likely amounts to a six digit figure for most mortgage holders in this day and age. The difference of about 25 points in your credit score might be the difference between getting an interest rate that is as little as a tenth of a percentage higher on the mortgage loan. Is a tenth or couple tenths of a percent a big deal? Over the life of the loan, even those tenths of a percent can add up to well over $10,000 more than you would have paid if you had taken the time to raise your credit score.

With regard to your credit score, there are some things reflected on your credit report which you have no control over, such as your amount of income. You also cannot control the total amount of your outstanding debt, but here is where it gets tricky. The actual amount of your outstanding debt may not be accurately reflected on your credit report.

To compound this problem, the status of each of your financial debts may not be accurately stated either. Many studies have shown that the majority of consumers have errors on their credit report. These errors run the full range of having accounts listed that do not belong to you, which is frequent for people with common names. They may have a debt showing as being past due when in reality it is completely up to date. It could have your balance listed as $9000 when in reality your balance on that account is $90. All of these errors combine into producing a credit score for you that is lower than it should really be if things were reported accurately.

Your first step in raising your credit score is to obtain a copy of your credit report from each of the three major credit reporting bureaus. Look them over with a fine tooth comb and then start the dispute process with the credit bureaus for anything that is not completely accurate. The credit bureaus have a legal obligation to either verify the information as correct, correct it, or sometimes even remove it.

Invest the time now so that you do not become a victim of your own credit score. Take the time to raise your credit score and make this a regular part of your standard financial responsibility tasks. The money you will save will play a much better purpose in your wallet than it will being paid out in loan payments.
About the Author
For more information and additional insights about how you can Raise Credit Score as well a getting free copies of your credit reports, please visit our web site at http://www.credit-help-center.com
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