Your Money Map by Howard Dayton

Author:Howard Dayton [Dayton, Howard]
Language: eng
Format: epub
ISBN: 978-1-57567-314-1
Publisher: Moody Publishers
Published: 2006-03-13T05:00:00+00:00

4. Develop a debt repayment schedule.

I recommend that you prepare a debt repayment schedule for every debt that you focus on paying off early. It will help you stay on top of your progress.

ABOUT YOUR CREDIT SCORE

Your credit score (FICO score) determines whether you can get credit. And your score may be high enough to get credit but not high enough to get a decent interest rate—whether you’re looking for a mortgage, a credit card, a car loan, or some other type of credit. Without good scores, your application to rent an apartment may be turned down. Your scores can affect your car insurance premiums and in some cases even getting a job.

A credit score is a number designed to help lenders and others measure your likelihood of making payments on time. The FICO score ranges from 300–850, with the average score around 680. Higher scores are better. FICO scores above 700 indicate a good credit risk, while scores below 600 indicate a poor risk.

A low score can lead to much higher interest rates. For example, if you apply for a thirty-year home mortgage and your credit score is too low, you could pay as much as 3 percent more. On a $100,000 mortgage, that 3 percent difference will cost you $200 per month. Over the life of the loan it adds up to $72,000!

The primary things that will harm your credit score are late payments or non-payments of bills or debts, bankruptcy, foreclosure, repossession, bills or loans sent to collection. Your credit score will also be affected if your credit history is short, or if you have maxed out your credit limits. To improve your credit score, the two most important actions you can take are to pay your bills on time and reduce your total debt. Once you start doing this, your score will begin to improve in about three months. Look at the factors affecting your score.

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