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Credit Repair News

2/19/2008
Pay less and save more with a high credit score.

If your number is above 700, you're likely to draw the attention of lenders who will vie for your business and offer lower interest rates.

With credit scores driving everything from interest rates and insurance premiums to utility service and job offers, a good credit score is possibly the biggest boost you can give your financial life. It puts you on equal footing with lenders and creditors who want your business, and over time, a good credit score can save you thousands of dollars.

"Everything is negotiable, with the right credit,'' says K.E. Varner, a former manager at credit reporting agency Equifax and the author of The Insider's Guide to Credit Repair.

What's good credit? Varner says above 700 is where you want to be.

"If you're at the 720 mark, you have some bargaining power,'' he says. "If you're in the mid-700s upward, you're going to get the very best rates available.''

The Web site www.myfico .com lists six stratifications within the prime credit range of 620 to 850. Below 620 you'll be offered subprime rates, if you're offered credit at all. Above 760 is equivalent to an "A,'' says Travis Plunkett, legislative director at the Consumer Federation of America.

According to myfico's daily updated mortgage rate data, that 760 credit score translates to a 6.3 percent interest rate on a 30-year fixed, $216,000 mortgage. Meanwhile, a 700 score would get a 6.52 rate. A 620 score would pay more than a full percentage point higher, 7.89 percent, for the same mortgage.

Howell Edwards, vice president of InCharge Debt Solutions, a national nonprofit credit counseling agency in Orlando, says that while different creditors judge credit scores differently, "anything over 700 is a pretty good score. A good credit score probably does give you the leverage that a bad credit score does not have,'' he says. "You do have companies that can compete for your business, because you're such a good risk.''

In return for demonstrating that low risk, those with 700-and-up credit scores can expect from creditors and lenders:

Job offers. Increasingly, potential employers pull credit reports and scores as another way to assess job candidates. "Overall, it's a reflection of a person's character. That's the assumption these companies make,'' Varner says.

Lower interest rates. This goes for home loans, car loans and credit cards.

Insurance. Home and auto insurers may look at credit scores before deciding if coverage will be offered and then at what premium. Edwards says that several years ago, insurers decided there was a correlation between credit score and losses and that people with higher scores filed fewer claims. That's possibly because habits from responsible credit use -- such as paying on time and refraining from taking on too much debt -- may carry over to responsible driving and homeownership. Hence the better rates for better scores.

Utility service. If you have good credit, utilities such as gas, electric, cable and phone companies may waive hefty deposits and offer better plans. If you're in that 700-and-up class, don't be shy about using it to your advantage. When Varner's bank called to offer him a reduced interest rate for a balance transfer, the Atlanta-area resident thought the terms weren't quite to his liking.

Varner knew his credit score -- 749 -- made him a desirable customer. So he started negotiating. "Not only did he give me a better rate, after that introductory rate expired, the original rate went down as well,'' says Varner.

One caveat: If you do have a good credit score and want to shop around for better deals, don't browse too long. Plunkett says a small number of credit report inquiries within a month is OK, but a prolonged spike in credit report requests could hurt your score.


 
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