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Building an Exemplary Credit Score When it Matters

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A three digit number holds enormous control over the quality of our lives and it can determine the type of apartment you rent, the loan you secure and the job you take on. This figure is your credit score, and if you are not aware of your score you may as well remain disconnected from civilization.

What exactly is this score?

The company that specializes in creating the score is the Fair, Isaac & Co., and their number is called the FICO score. A score of 850 happens to be the maximum anyone can secure but this is well-nigh impossible. Around half the consumers in America are bracketed in the range from 720 to 750. Whatever happens you don’t want to be below 680 which is considered as a bad credit score.

  • Lenders and credit dispensing agencies

The lower the credit rating, the higher the risk you ere perceived to be, and the higher will be the interest rate and other fees charged to you. Low ratings mean more expensive loans.

  • Health life and property insurers

If you have a good score you could save up to 30% on premiums, whereas if the rating is poor premiums escalate by as much as 140%.

  • Landlords and apartment owners

Owners want to know how promptly you pay your bills and loan liabilities. Any slackness may result in higher rent, higher down payments and interest payments on unpaid dues.

  • Employers and businesses hiring new candidates

Employers may worry that a person with a poor financial track record may not make an ideal employee as he would be focused so much on his bad credit that he would not exhibit the zest to perform work efficiently or discharge his duties responsibly.

  • Cell service providers

Companies are becoming increasingly finicky about their customer’s credit score, and if your rating is below par you may not be offered the better tariff plans. Alternatively, you may be asked to pay steeper deposits for better plans.

A lower rating can force you to take on expensive loans

The real cost of a lower credit rating will only be felt when a person handles the repayment for a loan availed at higher rates of interest. Let’s assume for the sake of an illustration that Peter has a score of 750 and is approved a home loan for 6%. His friend Jones who is rated lower at 650 is given the same home loan at 7% interest. The difference in their monthly repayment is that Jones pays $200 extra. After a period of ten years, if you review both the loans you will notice that Jones has paid a whopping $20,000 more than Peter. This is the price that Jones had to pay for a lower credit score. Jones will face a similar experience with his auto loan payments and insurance and healthcare premiums. The lower scores have a ripple effect on ones finances.

How to use cards and be safe

Starting with a credit card in college is a great idea only if you plan to use it smartly. Take only one card and use it for bare essentials only while ensuring that you have the money backed up to repay the balance in full. Alternatively, you can switch to a secured card by placing a deposit with the card company and use that amount as your spending limit. This is the best way to build up a good credit score quickly. FICO is also placing greater importance on how efficiently you maintain your checking account (how effectively you stick to savings rules) and how promptly you pay utility bills.

How you can leverage vehicle title loans to keep your rating high

If credit card expenditure has gone out of control don’t fret, use the loan for vehicle title to clear your outstandings quickly. The cash loan for title gives you an amount exceeding 60% of the resale valuation of your car using the collateral of the car pink slip. The car equity loan interest is quite reasonable at 25% APR and repayments are affordable as they can be matched to your monthly income.

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