When it comes to your personal credit score – the higher your score the better your chances are for approval and a very low-interest rate. When banks make a decision to approve a loan for you they are making a determining factor based on your FICO score.
A FICO score is a credit score developed by FICO, a company that specializes in what’s known as “predictive analytics,” which means they take information and analyze it to predict what’s likely to happen.
The 3 major credit bureaus give you each a score based on your past & present payment history and your middle score is considered your FICO score and this is the score most creditors will use to determine:
- If you are worthy of an approval
- If approved, what interest rate you should be given &
- If (or) how much of a down-payment is required from you
Many consumers don’t realize that banks/creditors make a LOT of money off of people with poor credit scores. When someone has an excellent rating, they are NOT paying high rates but when you have a credit score below 680 – you are in jeopardy of paying astronomical interest rates, and in many instances – you can’t afford it!
There are 2 types of people when it comes to attaining credit. One is concerned about the rate while the other is concerned about the payment.
For example: When someone knows they have bad credit and they are in need of a new car when they get to the dealership – they immediately inform the salesperson or finance manager “I need my payments to stay around $400 a month”. The rep interprets this as, “we can close this deal as long as I stay in that price range”.
So if a person with a 580 FICO and a person with a 720 FICO purchase the same vehicle, the person with the 720 FICO will in many cases end up with a rate from 1% – 7% with NO down payment while the person with the 580 will end up paying 14% – 21% in interest, this person will have to make a down payment and this is IF he/she gets approved at all!!
When your goal is to get ahead financially – you have to be willing to correct those things that are hindering you from getting ahead. People will ignore their horrible credit until the time comes and they need it.
Being proactive with your finances and your present financial situation is extremely important. If I can pay $200.00 for something with good credit, why would I want to be subjected to paying $400.00 for that same item with my bad credit? That extra $200.00 could go into a savings account or an investment account and make me more money instead of making the banks richer!
Banks thrive off of those with poor credit because people with good credit pay their bills, on time and in most instances ahead of time. They know and understand how credit and money work and to refuse to pay more than what’s required. Becoming more informed about YOUR own personal credit is important.
I challenge my clients to know exactly where they are today and make to make a concerted effort to have a goal to fix those things (financially) that they can. If you want to lead and live a successful life – you have to be willing to face the truth…no matter how ugly it may be. The great thing about your credit report is it can be fixed. You don’t have to live a life that is unfulfilling. You just have to be ready to take those necessary action steps to fix what is broken.
Take a FREE analysis today and see where you are and how you can reach goals that you’ve put on hold because your FICO score has held you back: CLICK HERE We look forward to working with you and helping you to rebuild your creditworthiness!
