Do You Understand Your FICO Score?

Coop's Corner

Coop's FICO Tip

I have had several conversations with people who have high FICO scores (770 or higher), but what they did not understand is that their credit report is now 1A and their FICO score is 1B. You may be thinking, "What does this mean?" You can pay your bills on time and if you have more than three or maybe two derogatory items on your credit report, then you may be put in a lower tier group (which means a higher interest rate) or even worse, you may be denied. How may you ask? For instance, I recently purchased another vehicle and was approved based upon my Experian credit score. I am noting Experian because most banks are concerned with this score. Experian is usually your lowest FICO score as well as the strictest of the three. Remember, it tends to be in their favor! With 8 out of 10 Americans having errors on his/her credit reports; banks are profiting an estimated $10 billion each year. If you correct the errors on your FICO report, you can potentially save with a 30 year fixed mortgage loan:

Amount Saved	4%	7%	10%
$300	$208k	$365k	$678k
$600	$416k	$731k	$1.356 mil
$1,200	$832k	$1.436 mil	$2.7 mil

Now imagine how much you can save with your credit cards? Remember this saying, "If financial education is expensive, then try ignorance!"

"Understanding your FICO Score"

By Linda Min

Seven Steps to Perfect Credit

Some people think that good credit is already good enough. Are you one of those people who think that? You may be questioning: "Why try to reach a perfect score when my credit score is already good enough...but is it really?" The answer is simply, "NO." The difference between a good and perfect credit score is similar to the difference between 4% interest rate versus 6% interest rate. In other words, when you manage your credit wisely, you are in the driver seat. Here is what you need to follow a PERFECT CREDIT SEVEN-STEP SYSTEM: P- Pull your credit reports and credit scores, E- Examine your files and enroll in credit monitoring, R-Reduce debt and manage bills wisely, F-Fix errors and protect your credit, E-Enhance your credit file constantly, C-Contact creditors and negotiate, T-Take time to educate yourself.

You can get this information from the book, "Perfect Credit," by Lynnette Khalfani-Cox, where she explains the seven steps in details. It is very important to pull your credit reports and credit score because it can give the proper checkup for your financial health and improve your credit rating. The 3 major credit reporting agencies are Equifax, TransUnion, and Experian. Khalfani-Cox suggests that you pull all 3 credit reports at once and sign up for a credit-monitoring service. If anything goes wrong with one of your credit files, you would want to get it corrected and become financially educated by viewing all your credit reports together. Essentially, you are giving yourself the same comprehensive view of your credit profile that many lenders currently use.

Getting your FICO credit scores is as important as pulling the reports. It is reported that the new 720 FICO score is now 760. You can go on to www.myfico.com, to get both the reports and score. However, you can only get your FICO scores from two different sources, Equifax and TransUnion but you should get your Experian score as well which can be retrieved from www.creditexpert.com.