Christian Debt Advice

How Critical Is Your Credit Score?

When it comes to Christian debt advice, it’s important to understand how critical your credit score can be.  It’s amazing how much influence the simple combination of numbers in your credit score have over the financial aspects of your life.  If you suffer from a paltry score, most likely you’re bleeding out hundreds to thousands of dollars in exorbitant interest payments over the years.  With a depressed score, you’ll have a difficult time locating a bank willing to lend you money.

This combination of numbers can significantly affect your capability of securing new credit and make the best deal on a loan.  Your score is so powerful, it can even hamper your ability to secure the best insurance rates and obtain employment.

What impacts the final number of your credit score?  The final score is calculated by a complex mathematical formula which evaluates how you supervise your use of credit.  Your credit score appoints a number value from bits of information contained in your credit report.  With this information, a determination of your likelihood to default on future credit is calculated.

If you were to research all the credit scores calculated out there, it would amount to a list of hundreds of scores.  If you were to ask financial professionals which score matters the most, it would be the FICO score (Fair Isaac Corporation).  This score has the highest impact on your ability to obtain a loan with most banks and has been the grandfather of all scores.  Typical scores can range from 300 to 850 with higher scores commanding better interest rates on a loan.  The majority of home lenders use this benchmark score to determine how creditworthy you are.  An average FICO score hovers around 725.  If your score is less than 650, you’ll have a hard time qualifying for low interest rate loans.

Lenders place all lot of weight on your credit score when determining if you’re a good candidate for a loan.  Applicants with scores in the upper ranges are treated as dependable credit risks and are offered the lowest interest rates.  Applicants with scores down in the lower range are looked upon as poor credit risks-if approved for a loan, these applicants are offered higher interest rates on a loan.

Insurance companies depend heavily on this score to tell them if you’re someone likely to file a claim.  Independent studies by insurers reveal a link between consumers with poor credit and the chance of filing a claim.  If you suffer from a terrible score, don’t expect your premiums to be as low as someone who has excellent credit.

If you’ve been suffering with a low score for what seems like an eternity, don’t give up hope.  With some good Christian debt advice, you can take proactive steps to rebuild it.  Contact the three major credit bureaus (TransUnion, Equifax, and Experian) to order a copy of your report.  Verify your report to be sure there aren’t any discrepancies.  If you see anything incorrect, be sure to dispute the item with the bureau in writing.

You should also jumpstart the credit rebuilding process by applying for a secured credit card and making your payments on time.  As you demonstrate responsibility over time, you’ll see your FICO score improve.

For more Christian debt advice, check out my Christian Credit Debt Relief Counseling Course!