Credit score: Polishing your credentials

The credit crisis has tightened lending standards across the board, said Lauren Young in BusinessWeek. But consumers with “stellar credit” and “ready cash” may be able to use banks’ risk-averseness to their advantage. Banks now looking to make loans crave safety. “There are a lot of hungry mortgage originators, so great credit-quality borrowers are in the driver’s seat,” says Keith Gumbinger, vice president of mortgage market analyst HSH. All three major credit bureaus— Experian, Equifax, and TransUnion—quantify information in a FICO score (short for Fair Isaac Corp., which devised the method). “Two years ago, borrowers with a score of 650 out of 850 qualified for the most competitive interest rates.” Now lenders have upped the ante, and are looking for scores closer to 750.

Even if you have no immediate plans to borrow, look for ways to improve your credit rating, said Ron Lieber in The New York Times. Your score is something you actually have a “fair bit of control over—unlike the economy, the stock market, and home prices.” The biggest causes of low score? Paying bills late, using too much available credit, and carrying too many retail credit cards. Reports from the three bureaus are available for free at Annualcreditreport.com. Keep tabs on yours by annually checking the reports for errors. The FICO scores themselves can be obtained for $47.85 at Myfico.com.

If a credit report is marred by incorrect information, you might consider a “little-known” method to repair it quickly, said Elisabeth Leamy in ABCnews.com. The service, called rapid rescoring, is only available through mortgage lenders—and shouldn’t be confused with so-called credit-repair offers. Credit-repair scammers promise to remove unfavorable information from credit reports, even if it’s true. By contrast, credit-rescoring professionals require proof that information slated for removal really is false. Many rapid-rescoring services are able to fix errors within days. “If your mortgage broker or lender doesn’t suggest it, be sure to ask if you’re a good candidate.”

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