How to Perfect Your Credit Score

[Deerpark Tiger]

How to Perfect Your Credit Score
Going From a Good Score to a Pristine One Can Save Thousands of Dollars


By

AnnaMaria Andriotis
Jan. 9, 2015 2:49 p.m. ET


Olympic divers and college-bound test-takers have a valuable lesson to teach U.S. borrowers: Getting a higher score can really pay off.

Lenders make well over $1 trillion in loans every year based in large part on credit scores developed by Fair Isaac Corp. , a firm based in San Jose, Calif., that attempts to quantify which borrowers are most likely to repay the money on time. Borrowers with higher FICO scores are generally eligible to get bigger loans at lower interest rates.

But turning a good score into a great one can win you an even lower interest rate, and save thousands—even tens of thousands—of dollars for borrowers who take out a mortgage, buy a new car and use credit cards, experts say. In addition, consumers with sterling credit often have their pick of lenders and can sometimes use that leverage to pay lower loan fees.


Tens of millions of Americans carry credit scores that are just under the highest range. Some 32.8 million people have FICO scores between 700 and 749, on a scale of 300 to 850, and another roughly 36.4 million people have scores between 750 and 799. About 38.6 million are in the 800-to-850 range. Roughly 1% of the people with FICO scores, or around 2 million individuals, have a perfect 850.

Most lenders consider people with FICO scores of at least 720 to be prime borrowers, and generally charge them interest rates that are low—but not the lowest available.


http://www.wsj.com/articles/how-to-perfect-your-credit-score-1420832973

 

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[Olde Hornet]

Interesting article. I found this to be the most important:

The good news is that if you manage debt responsibly, your FICO score should increase and the benefit should endure for years. When borrowers successfully pay off car loans or mortgages, the information stays on their credit reports for 10 years from the date of the last payment, according to credit-reporting firms.

There is an important exception: If you miss payments or default on a loan, that information stays on your credit report for seven years. So if you encountered financial difficulties during the financial crisis, say, waiting a little bit longer before taking out a new loan could be worthwhile.

The impact of missed payments is usually worst in the first few years, but 96% of people with a FICO score of 785 or greater have no late payments on their credit reports, according to FICO.

Time your loan applications wisely, as well. Consumers should look for the lowest interest rates on mortgages, car loans and student loans. Shop quickly: Such credit inquiries aren’t factored into your FICO score within their first 30 days on file. They can affect the score after that period but are treated as one inquiry if they occur within a 45-day window.

 

[Tpop33]

Interesting article. I found this to be the most important:

The good news is that if you manage debt responsibly, your FICO score should increase and the benefit should endure for years. When borrowers successfully pay off car loans or mortgages, the information stays on their credit reports for 10 years from the date of the last payment, according to credit-reporting firms.

There is an important exception: If you miss payments or default on a loan, that information stays on your credit report for seven years. So if you encountered financial difficulties during the financial crisis, say, waiting a little bit longer before taking out a new loan could be worthwhile.

The impact of missed payments is usually worst in the first few years, but 96% of people with a FICO score of 785 or greater have no late payments on their credit reports, according to FICO.

Time your loan applications wisely, as well. Consumers should look for the lowest interest rates on mortgages, car loans and student loans. Shop quickly: Such credit inquiries aren’t factored into your FICO score within their first 30 days on file. They can affect the score after that period but are treated as one inquiry if they occur within a 45-day window.

I just went through this when searching for a vehicle loan. I was told to limit my inquiries to less than ten and within a two week period, in order for it to be considered as on total inquiry. I ended up with a total of 4 inquiries before finding the rate I wanted.