|
Check the Situation That Best Applies to You... And Then Click the Button Below to See Your Credit Scores Absolutely Free I want my free credit scores I want to apply for a loan I want to buy a home Just curious
(Click the button above to see your Experian, Equifax, Transunion credit scores for free) |
You're faced with a dilemma. It is the end of the month and you've got a stack of bills due. You were expecting to go on a special weekend getaway with chums, but do not have the money to pay all your bills and enjoy the trip. You realize something has got to give, so you make a decision to skip a payment on your Visa card to have money for the weekend. It’s only 30 days, you are saying to oneself, and you intend to actually get serious about paying down your bills after this month.
That decision could cost you thousands of greenbacks.
“Making delinquent payments is really the number-one way that consumers can damage their credit report and credit score,” announces Chaomei Chen, head of credit risk for the credit card division of Seattle-based Washington Mutual. “Conversely, making on-time payments is the best way to increase a consumer’s credit history over time.”
Keeping Score On Your Credit History
Credit scores derive from info found in your credit reports, which are maintained independently by every one of the 3 major bureaus-TransUnion, Equifax and Experian. The data is run through a mathematical formula to produce your “FICO” score. Fair Isaac Establishment (FICO) invented and promoted the methodology for judging consumer credit risk. Most FICO scores run between 300 and 850. The bigger the score, the better, because consumers with high scores are offered the lowest rates for homes, cars and other consumer loans.
Even One Overdue Payment Can Hurt
Chen indicated that just one late credit card payment may have a unimportant effect on the score of shoppers who already have a dramatically low FICO score, and conversely could drop the FICO scores of people that already have really high FICO scores up to 100 points. “That difference in FICO score can add many thousands of bucks in interest payments over the term of a loan. It’s in the consumer’s best interest to pay bills on time each month.”
According to Fair Isaac, for a $250,000 mortgage, based totally on recent interest rates, a purchaser with a 700 FICO score would have a once a month payment of $1,614 for a 30-year fixed rate mortgage. A purchaser with a 550 credit history would pay a projected $2,094 a month for a similar loan. That is a difference of $480 a month, and $173,000 in additional interest over the length of a 30-year fixed-rate mortgage.
That weekend getaway has become really expensive.
As well as paying debts smartly, Washington Mutual- the only Mastercard issuer in the U.S. That provides its credit card clients free online access to their FICO scores-recommends other straightforward ways to increase credit scores, including:
Pay more than the minimum due on Mastercard accounts each month.
Keep the balances on rotating credit accounts below 50% of the line of credit.
Test your credit report one or more times a year to be sure that info is being properly reported.
Don't be late in paying your bills. Even one late credit card payment can cause a credit history to fall up to 100 points.
Want to know more about how to improve credit score? Visit our site to learn more.
You will also find information about the top credit repair companies as well as our LifeLock promo code.