According to FICO Inc., over 25% of Americans (43 million people) had sub-600 credit scores compared to a historical average of about 15%. This portends trouble for the entire economy for years to come since these lower credit scores are going to result in restricted and more expensive access to credit. While mortgage rates are at an all-time low, few consumers are still able to tap the opportunity to refinance or buy at the most attractive rate since lending institutions are becoming increasingly conservative in this deteriorating credit environment.
This drop actually makes sense in the context of increasing unemployment, delinquencies, strategic defaults and lower paying jobs. However, the trend is ominous, especially if it continues into a viscous circle of restricted credit – driving lower consumer demand – killing more jobs – resulting in higher unemployment and onward. Having a great FICO score has saved our family thousands of dollars over the years due to the ability to get the lowest mortgage rates and auto finance rates. Often times, you’ll see an advertised rate that looks very attractive, but the fine print is that it only applies to applicants with credit scores of say, 760 and above. Once you’ve made the decision to buy a car or you’re moving to buy a home, chances are you’re going to proceed anyway, even if you find out the rate you have to pay is half a point higher. By having optimal credit all the time, you’ll be assured of both access to credit and the lowest possible rate, opening doors for you that wouldn’t have existed otherwise.
How are FICO Scores Calculated?
FICO scores are calculated based on two predominant factors:
1) How much of your available credit is actually being used
2) how consistent you are in paying bills.
While there are some other minor factors, these are the key heavy hitters consumers should focus on first if looking to improve their score.
How to get a FREE FICO Score
FICO scores are the most prominent measure of consumer creditworthiness. Even though various scores exist, FICO tends to be the only one that is universally accepted as opposed to some outfits only relying on their own individual scores. For this reason, it’s key to understand where you stand and how to improve. It’s actually quite easy to get your FICO score for FREE with minimal effort. Just do the following:
Sign up for a Equifax FREE 30-Day Trial and then cancel within 30 days. The cancellation process is quick and easy and you’ll get an instantaneous snapshot of your score. It’s that easy! If you actually want to continue to monitor your score and be notified of updates as you improve, there’s a monthly service they offer that’s not free, but that’s totally up to you.
Fine print outlining the cancellation/charging:
* To receive your 30-Day free trial, you will be required to provide a credit card when you sign up. If you don’t cancel by the end of the 30-Day free trial period, we will automatically renew your subscription and charge your credit card $14.95 for each month that you continue your subscription. You can cancel your subscription at any time. Cancellation will be effective as of the end of then-current monthly period.
Get your FREE FICO Score Here.