The Wise and the Wary
Who can you trust? Deb hears this question over and over again in her professional practice as an elder law attorney and a fee-only, holistic financial planner. Let Deb teach you how to protect yourself and your assets from those who might not have your best interests at heart. [Editor's note: Deb no longer contributes to Silver Planet, but we have made her archived blog entries available as a service to our readers.]
How Your Credit Score Is Derived
The national median FICO score is about 720
Most lenders will rely on your FICO score to assess your creditworthiness. Your FICO score is derived by the Fair Isaac Corporation from information reported by three national credit reporting bureaus: Equifax Inc., TransUnion LLC, and Experian Group. These agencies, in turn, get their information from voluntary submissions from certain creditors across the country. Mortgage companies, auto loan financiers, and consumer credit card companies are the major contributors of information. These credit reports contain information on how much you owe, what kind of loans you have, your payment habits, and serious matters such as court judgments, collection agency efforts, and bankruptcies.
FICO scores are within the range of 300 to 850, with a national median of around 720. A FICO score of around 780 will put you higher than 80% of your fellow debtors, and will likely make you eligible for the lowest interest rates and fees and the most favorable terms and conditions on the loan. A FICO score lower than 680 will make favorable mortgage rates nearly impossible.
You can buy your FICO score report at MyFico.com for $15.95. You can also receive free credit reports from the three credit reporting agencies once a year at AnnualCreditReport.com. These reports won’t recite your actual FICO score, but they can give you valuable information on how your credit history is viewed by potential creditors.
How does your score affect your bottom line? Let’s look at home mortgages, now at their historically lowest rate ever. As of December 2, 2009, a FICO score of 760 to 850 merits a 30-year fixed rate mortgage interest rate of 4.479%; on a $300,000 loan, the monthly payment would be $1,516. A FICO score of 680 to 699 would raise that offered rate to 4.878%, with a monthly payment of $1,588, or $72 more. Over the lifetime of this loan, you would be paying $25,920 more, which clearly impacts your bottom line. It pays to pay attention to your score!
By Deborah Hoskins, JD, CFP
The Wise and the Wary Blog
Our Silver Advisors™ are professional geriatric care managers and other experts who provide phone consultations on preventing falls, navigating Medicare, evaluating senior driving challenges, and other issues baby boomers must resolve while caring for an aging loved one. Silver Advisors clarify concerns, suggest a plan of action, help prioritize next steps, and furnish personalized written plans and recommendations. All callers receive a complimentary 15-minute consultation.
What We Do
Silver Planet® helps baby boomers guide their parents to age in place by providing services and products related to aging at home and housing options.
