Managing credit means checking your credit report and credit score frequently to know where you stand, and ensuring that you don’t have errors or possible fraud showing in your credit history. It also means using credit wisely to keep your score high, allowing you to benefit from the best possible financing terms when you need credit for large purchases like cars, boats or real estate.

Remember that checking your credit score (or when a financial services company checks your report for a promotional credit offering) is a “soft” inquiry that will have no impact on your score. Your score is only impacted when you make a formal request for credit resulting in a “hard” inquiry that can potentially lower your credit score. Don’t be afraid to check your credit report frequently so you know your credit status, especially prior to a major purchase.

The three major credit bureaus, Equifax, Experian and Trans Union, all offer credit management products that provide frequent access to credit reports, credit scores, analysis tools, and e-mail updates for an annual fee. They also offer one-time purchase of your credit score. In addition there are numerous third-party companies that offer similar products including the ability to show you all three credit bureau reports with each of their corresponding scores.

If you would like to get more information on this e-mail me for your free copy of “Your Credit Score - An insider’s guide to credit scoring and home financing”

One of my colleagues at Primary Residential Mortgage Inc, Collin Tommerson, shared an article with me on the new credit scoring engine VantageScore. This engine was designed by the three major credit repositories Equifax, Experian and Transunion and has the potential of replacing the Fair Issac engine (FICO) which is not owned by the three major bureaus (yes it is about the money).

Among the many differences between the new credit scoring engine VantageScore and FICO the one that will cause the most confusion will be the different scoring range used by the different systems. The classic FICO scale runs 300 to 850 while the VantageScore starts at 501 and runs to 990. To learn more about the new VantageScore engine I encourage you to read the article by Liz Pulliam Weston published on MSN Money titled “What the new credit score means to you”

To read this article click here:  http://preview.tinyurl.com/NewCreditScore

Thanks Collin for sharing this information.

I saw a great article today on MSN Money that gives very practical tips on how to review manage and improve your credit score. To read the entire article go to How to win the credit-score game.

The highlights of this article are: 

1. You have to nail the basics

• Patrol your credit reports by checking your report regularly.
• Get a major credit card like Visa, MC or American Express.
• Don’t let disputes go to collections even if you are going to win.  
• Give your limits a wide berth by asking your credit card company to increase their limits.

 2. Spread out your debt.

• A balance is a balance even if you pay it off at the end of the month.   
• Shoot for 10% - Keep your credit card utilization below 30 is good but 10% is better.
• Push back against lower limits.

3. Three strategies for lowering utilization

• Move debt to installment loans. 
• Or move debt off your credit reports entirely.
• Play the home equity card cautiously.

4. Walk a fine line on plastic

• Don’t close accounts or let them be closed. 
• Apply for credit sparingly.

I hope this helps you improve your credit score. If you need any further advice, let me know.

Reprinted from RealtyTimes Real Estate News and Advice

Americans’ lack of correct information about scores and the credit system is costly, according to the survey. If all consumers raised their FICO scores by just 30 points on average, “total consumer savings would exceed $20 billion” a year.

The potential impact on home buyers is especially severe. Using data compiled by Fair Isaac Co. from regular surveys of mortgage lenders, if an applicant seeking a $300,000 fixed rate mortgage raised his or her credit score from 580-619 to 660-699, the applicant would save $5,148 in annual interest payments.

Full article available at: http://realtytimes.com/rtpages/20070730_creditscores.htm

Reprinted for: Money-Zine.com

Credit scores are on a scale from around 300 - 850, with 850 being the highest credit score possible.  To give you a feel for the extremes, while the national average credit score is 692, only 13% of the nation’s population has scores above 800.  At the other extreme, roughly 15% of the population has a credit score lower than 550.  In general, a good credit score is anything above 700.

So that gives you two data points to think about.  The national average credit score is 692 and a good credit score is anything above 700.  Does that mean that half of all Americans have a credit score below the national average?

The short answer is No.  In fact, 58% of Americans have credit scores above 700.  The national average is only 692 because the average is being pulled down by some very low credit scores.  Remember, we’re not talking about the median score (half above and half below), we’re talking about an average score.

Full article available at: http://www.money-zine.com/Financial-Planning/Debt-Consolidation/National-Average-Credit-Score/

Experian® Study Shows Severely Delinquent Mortgage Accounts Up 15 Percent in One Year 

Experian’s National Score Index® study showed that many U.S. homeowners continue to weather the current credit crunch and real estate market conditions, as the number of severely delinquent mortgage accounts increased 15 percent in one year.

The national average credit score for those with a severely delinquent mortgage account was 599 in February 2008, compared to 605 in February 2007. Conversely, the average credit score in February 2008 for those with a mortgage account with no delinquencies was 750. Severely delinquent mortgage accounts include charge-offs, foreclosures, repossession, collections, voluntary surrender and bankruptcy.