Credit scoring is one of the deep, dark secrets of our modern financial world. While millions of Americans know they have a “credit report”, few understand what it means. Even more, if you aren’t careful, new, high-tech credit scoring processes will hammer you with higher pricing for your home, car, insurance, and other consumer items.
Unless you live on a “cash only” basis, you have already been scored. The most commonly used credit score is a three-digit number, ranging from 350 to 850. The number rates how much of a risk you are to a lender or insurance company. Lower scores predict higher risks, which create higher prices. Higher numbers indicate less risk and the potential for lower prices.
Now it gets interesting. In the past, if you had steady income and always paid your bills on time, you were in good shape. You could get a fair loan at a fair price. That’s not always true anymore. Now, price and interest rates are tied to your credit score, along with several other factors. You need the highest credit score possible or thousands of your hard earned dollars could go down the drain. Here’s a “short course” in what to do to increase your credit score, pay lower prices, and save money:
Dr. Kregg Hood preaches, teaches and consults in the area of stewardship, financial ministry, and helping people understand God’s powerful principles for managing money. He has authored three books, including his latest Escape the Debt Trap. He and his family live near the Dallas/Ft Worth Metroplex.