Don't Get Caught With Your Credit Report Score In The Gutter

Here's a nightmare credit scenario. You search for weeks for a perfect house, make an offer, and it's rejected because your credit was considered too risky.

This problem is all too real and with the collapse of the subprime lending market, more people are finding it difficult to get a mortgage. Many people are unable to purchase their dream house, a nice car or even an engagement ring simply because their credit report score is too low. They may have good jobs and the ability to pay, but something in their credit report is causing potential lenders to balk.

Do you know what your credit score is? If you don't, your financial outlook could be in jeopardy. Your credit score determines whether lenders approve or deny your application. Think of it like a passport. You're either stopped at the border or waved on through with a smile.

Happily, this information has never been easier to get. A law called FACTA (enacted in 2005) gives you the right to view free credit reports from all three big credit bureaus once a year, totally free. You should take advantage of this gift. You can also find offers to see your credit score for free online.

Before any big purchase, you should find out what's in your credit report. Experts suggest you prepare for major buys in advance, up to six months early. That gives you ample time to challenge any errors on your report and establish a recent good-pay history.

Fast Facts About Credit Scoring

• Credit scores are based on real data and statistics


• Scores are usually more reliable than subjective methods (which rely on criteria that are not systematically tested and can vary when applied by different individuals)


• Scores treat all applicants objectively

Follow These Steps to Improve Your Credit Scores:

• Pay all your bills on time. Don’t ever let a bill go to a collection status.


• Consider a credit report monitoring services. This service acts as an early-warning system, reporting all activity on your credit report to you via email for a small monthly fee.


• Avoid unnecessary requests for your credit report. The number of inquiries counts toward your credit score and fewer are better. Be very selective when you apply for new credit. Too many can ding your score.


• Consolidate high interest rate loans under one lower interest rate loan. Don't rack up new debt while you pay off your current obligations.


• Check your credit reports for errors and instances of identity fraud. Take action by reporting any errors to the credit bureau for investigation.