Credit and debt counseling has become a booming business over the last few decades..
For many people, their most important dream is to own a home...
If you have amassed a rocky credit history and if you are burdened with a low credit score

Understanding Your Credit Score

Throughout your life you will probably need credit for lots of reasons. You may need a new car, or might have your eye on a starter home. You may even be starting a business. Whatever the reason, one little three-digit number describes your payment habits, risk, and previous credit history. This number can hurt you or help you—and access to it instant, thanks to computers and the internet—so make sure it’s in tip-top shape.

The Relationship BetweenYour Credit History and Your Credit Score

Your credit history is the basis for your credit score, and is determined from a credit report. The report lists your credit history, such as what kinds of loans or credit you’ve had, whether you have had bad debt, your payment history, and the status of any existing loans or lines of credit. This tells a lender or credit card company whether they should extend their credit to you by giving them a good idea of what kind of risk you are.


The Three Major Credit Reporting Agencies

Equifax, Experian, and TransUnion are the big three of credit bureaus, and invented the scoring method in the 1980s with help from Fair Issac and Company. The method—which is owned and kept secret by Fair Issac—is called FICO, and each of the credit bureaus uses their own variation. The number will fall between 300 and 900, and will consist of payment history, current unpaid debt, how long you have had credit, number of credit inquiries, and types of credit you’ve had.

A Look at VantageScore ... A New System of Tracking Credit Usage and History

A new system may soon be on the forefront, however. VantageScore is a new system by the big three credit bureaus, all of whom contributed to its development. The scores go from 501 to 990, and carry a grade from A to F, with A being the top score.

Why Does It Matter:

And why does this matter? Because aside from whether you get the credit you request or not, there is also a matter of interest rates. Even those with below-average credit can get loans or credit cards, but the difference in interest rate can be enormous. According to Fair Isaac’s website (, a $300,000 30-year mortgage loan to someone with a FICO score of 760 to 850 would be charged a 5.683 percent interest rate (making monthly payments $1,738). That same mortgage for someone who falls between 580 and 619 will run 8.271 percent interest, and a $2,258 monthly payment.

Take Care of Your Credit

You need to take your credit usage very seriously.  You need to make every effort to deal with your loan and credit obligations in a responsible and appropriate manner.  Over the life of the loan, that’s an enormous amount of money spent on interest—take care of your credit and it will take care of you.