002 - 01/03/09

Q. How can I obtain the best rate on a loan?

A. Provided by Colleen Bennett, Estates Director/Realtor/SRES, Dilbeck Premier Properties

To get the best rate on a 30-year fixed rate home mortgage, you need a FICO (Fair Isaac, Co.) score of 760. To get the best rate on a 15-year home equity loan, you need a 740 FICO. To get the best rate on a 36-month auto loan, you need a 720 FICO. Yet the average FICO score in the United States is 690. FICO generates your score from one of the three credit-reporting scores: Equifax, Experian and TransUnion Corp.

So, the takeaway is clear: Improve your credit score. Here’s how:

1. Ask your credit card issuer for a higher limit. If your credit card debt remains the same, but your credit limit is raised, your percentage of debt actually shrinks, thus improving your FICO.

2. Always pay on time, even if that means just paying the minimum balance. Payment punctuality accounts for 35% of your FICO.

3. Keep existing accounts open and active. In the twisted credit world, closing an account makes you look less creditworthy. Who knew that trying to be responsible by reducing your number of credit cards could penalize you?

4. Order a copy of your credit report. Through annualcreditreport.com, you can obtain one free credit report a year from each of the credit reporting agencies. Take the offer because roughly 25% of all credit reports contain mistakes that could ding your score.

You deserve the best rate, but you have to work to get it. Start today!