Is your credit score an asset or liability?

In today’s world, credit scores are more important than ever. Your scores determine the initial interest rate you are charged for loans. In some areas, even your car and home insurance premiums are affected by credit scores. Most employers have credit reports run on potential employees as part of their hiring process.

There is talk of the possibility of medical insurance premiums also being based on credit scores. Credit card companies have the ability to raise interest rates if someone’s credit scores decline, even if they haven’t made a late payment on that particular account.

Credit scores should be monitored and guarded like gold. They are critical in securing lower rates and less documentation in qualifying for loans.

Here are some tips to safeguard and improve your scores:

Keep credit card balances to 50 percent or less than the allowable credit limit. Doing this can improve your scores as much as 80 points. Also, if you pay the card account off, keep the account open. Your scores reflect the available credit on the individual accounts and also the cumulative available credit on all of the accounts.

Be careful not to have too many inquiries into your credit reports. Several during a year is normal and expected, but when numerous inquiries show up, it makes it look as though you are getting ready to add a lot of debt.

If there are mistakes on your report, don’t delay in getting them corrected.

Having a mix of on-time payment accounts including a home loan, car loan and revolving credit helps increase scores.

Federal accounts such as student loans and federal tax liens affect credit scores tremendously. It is extremely important to pay off and document federal tax liens. Paying student loans on time as agreed is crucial to a healthy score.

Credit scoring is the main criteria lenders use to judge the credit worthiness of loan applicants. If your credit report is based on inaccurate information, you are putting yourself at a disadvantage. Great credit scores allow borrowers to qualify for loans at lower interest rates, which saves them thousands of dollars over the term of their loans.

JoAnn Moore is a Licensed Mortgage Professional, Certified Military Housing Specialist and president of The Mortgage Market of Delaware in Georgetown. NMLS# 165477. Office 302-855-1306, Cell 302-236-1229;  MMODJoAnn@aol.com. www.TheMortgageMarketofDelaware.com.