CreditScore.ws

Credit scores are becoming more and more important as financial institutions more closely examine how they manage their funds. Increased government regulation in this down economy has led to higher interest rates passed onto credit users.

While 720 used to be a good enough credit score to get the best interest rates on a mortgage, now some lenders are requiring scores in the high 700s to get the best rate. Credit card interest rates are getting jacked up too with any late payments. Don’t give the credit institution any possible reason to raise your rates!

I went into a large national bank a few weeks ago to see what kind of mortgage I would get pre-approved for. I had heard that it could be difficult to get a good mortgage rate for self-employed people, and I wanted to see if it was true. Since the self-employed generally do not have a history of steady paychecks going back several years, credit scores are very important. My scores across the 3 major credit bureaus had a range of about 30 points. This bank requires 2 years of tax returns as proof of income for the self-employed.

After discussing my business, pulling up my credit scores, and looking at my last 2 years tax returns and current bank account balances, I was pre-approved. It was made to be a very simple process, and I was impressed by the ease of getting pre-approved in this time of low interest rates. I look forward to actually using this credit score in the future when I make a large purchase someday!

How do I improve my credit score?

We get asked this question a lot, and for good reason- it’s important! If you want to use credit to buy a car, rent an apartment, get a mortgage, or anything else, you’ll want to have a good credit score.

Unfortunately, many people have unknowingly damaged their credit profile with things they’ve never given a second thought to. Some people don’t know that credit card payments, cable and internet payments, house and apartment rent payments, car payments, student loan payments, and more can affect your credit rating.

Here are some quick ways to improve your credit score:

Pay all of your bills on time with at least the minimum payment. Paying more than the minimum payment is ideal, but not necessary.

Pay your credit cards only once per month. Multiple payments within the same month can be looked at negatively sometimes.

Lower the amount of balance you are carrying on your cards. You want a low ratio of what you are borrowing to the maximum you are allowed to borrow.

If a lack of credit history is keeping your credit score down, perhaps you should start financing some purchases. Even though you might be able to write a check to buy a new car, it might be wiser to finance the purchase at a low rate over a few years to prove that you can responsibly handle credit.

Review your credit report and look for errors. Sometimes there are errors that could be hurting your credit score that can be easily corrected.

What is a good credit score?

A lot of people ask this question- in fact over 18,000 people ask this exact question on Google every month. Typically, credit scores are divided into

According to Fair Isaac, the median credit score is 723. This means that half of people have scores below this number and half have scores better than this. However, the average credit score according to Experian is 678. Since the average is lower than the median, this means that credit scores are skewed left. There are more extremely high scores than there are extremely low scores.

All three credit agencies maintain their own databases and credit score formulas, so your score across each could vary by as much as 50 or even 100 points. Which one matters most? I suppose that is up to your lenders- just ask and they’ll be happy to let you know which one or multiple credit scores they use.

Get your credit score for free!

You probably hear or see this type of advertisement daily, but there is almost always a catch to it. Most of the time, these “free credit score” offers involve signing you up for a monthly credit watch subscription that costs between $10 and $30 per month. If you forget to cancel after the free trial is over, you get stuck with monthly fees that far exceed the cost of buying your score one time.

Supposedly, there are a number of sources to get your free credit score without costs down the road. At one time or another, it was probably possible by having a Washington Mutual credit card, using Prosper (the person-to-person private lending website), joining Lending Club, applying for an e-Loan mortgage, or becoming active on CreditKarma.

I don’t know if any of these methods currently work, but you should check out their credit websites and poke around. You might be able to get your credit score for free!

Today marks the creation of the new website on CreditScore.ws. We plan to write articles about how to find a free credit score, what is a good credit score, how to improve your credit score, and what is an average credit score. Check back frequently as we add more great information and resources.