By Mandelman
Like it or not, your credit score today impacts your entire life. But, just because yours is lower than you’d like, or lower than in the past, does not mean you’re stuck living with it.
A lower credit score not only means that you’ll pay higher interest rates on mortgages, car loans, credit cards and other loans, but it could also prevent you from getting an apartment or being hired for a job you want, or lead to your having to pay more for insurance coverage.
Prospective employers, landlords, lenders and even your insurance company view a higher credit score as a proven ability to manage money and meet financial obligations… they see a higher score as an indication of a persons maturity and stability… as an indication that you will meet your obligations and responsibilities to them as you have to others in the past.
Is any of that true? Can your future life accurately be reduced to a three digit number, calculated according to one of many “proprietary” and clandestine scoring models that entirely disregard factors that include income, length of time on the job or in your home, and net worth?
Without putting too fine a point on it, let’s just say that it would seem unlikely… especially when you consider that there isn’t just one “credit score,” in fact, there are dozens of credit scoring models, some of which are unique to certain industries such as mortgage lenders or credit card issuers. And even within a single industry, different companies may score things differently. For example, Forbes Magazine recently reported that your score pulled by one credit card issuer is likely to differ somewhere between “5 – 50 points from another credit card issuer.”
The Wall Street Journal recently reported that nearly a third of consumers have a FICO score between 550 and 699, and nearly half have a FICO score below 700. And according to CreditKarma.com, the average credit score of Americans today is 661, meaning that the average American has a hard time getting approved for credit, and when they do, they’re likely to pay exorbitant interest rates.
So, it should come as no surprise that, according to CardHub, a credit-card comparison website, the average interest rate for someone whose credit score is below 720 is 17 percent. And yes, as scores go down, the rates only go up …read more
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