I’m willing to bet that if you walked up to the average person on the street and asked them if it’s possible to find a loan today, they’d tell you: No way, man!
It seems like we’ve been hearing that the credit system has been frozen for months now. The media make it seem like no one can get a loan, even if they offer their 1st born. But that simply isn’t true. In the past 6 months, I’ve been able to borrow money for a new house, and a new car. I wish I didn’t have to, but it’s extremely difficult to avoid borrowing money for a family of 4 on a single income.
The truth of the credit matter is that banks have stopped loaning to risky borrowers, not all borrowers. But isn’t this a good thing? I mean, after all, it was lending money to people who couldn’t pay it back (sub-prime borrowers) that created this mess in the first place.
So, the trick is knowing what your credit score is and how to get it where it should be. So, you may be wondering, “How can I increase my credit score?” Before we get to that, it’s important to know that your credit score just got a whole lot more important.
The increased importance of your credit score.
According to a recent MSN Money article,
“Credit scores are three-digit numbers lenders use to gauge your creditworthiness, and in recent years a 720 FICO credit score was enough to get the best rates and terms. Even people with lower scores could get a decent deal, and at the peak of the lending boom it seemed no score was so low that it merited a rejection.
These days, some lenders demand a 740 score for the best mortgage rates. Lower scores mean higher rates; if your scores are below 580, forget about it.”
Clearly, it is imperative in the world today to have an excellent credit score. Here’s how you do it:
Know your situation.
You can’t expect to get where you want to be if you don’t know where you’re starting. Get your credit report from http://www.annualcreditreport.com/ (you can read a review of the process here). Here’s a little tool to give you a quick idea of where your credit score is.
Avoid the pitfalls.
Be sure you stay away from these Credit Card Pitfalls that are sure to ruin your credit.
Don’t believe the myths.
Many people have misconceptions about what will and won’t affect their credit score. Here are 3 Common Credit Myths Exposed to help you cut through the garbage and find the facts.
Get to where you want to be.
Once you know what your score is, and what kinds of credit behavior to avoid, check out 5 Ways to Improve Your Credit Score. Improving your credit score is all about knowing what determines your credit score. It worked for me, and it will work for you. But be sure not to expect a magic bullet cure-all. Your credit score is the result of your behavior toward borrowing, and it takes time to change behavior and credit scores.
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