Check Credit Score Reports Before Pursuing Loans

Check credit score reports often and most importantly before pursuing loan options. A bad credit score can greatly increase the interest percentage on a loan thus increasing the total amount repaid over extended periods of time. This increase could actually cost a consumer hundreds, if not thousands, of dollars over the lifespan of the loan.

When you check your credit score you'll find a number that represents your perceived credit worthiness based on your credit files and history. Lenders including banks and credit card issuers use this number to evaluate the potential risk involved in lending cash to each individual.

The first method to determine credit scores was introduced by Fair Isaac Corporation, also known as FICO. Click here to get your Free FICO Credit Score. This credit score is used by many mortgage lenders that use a risk-based system to determine the possibility that the borrower may default on financial obligations to the mortgage lender.

The reason it is vitally important to check credit score reports prior to applying for any loan product is simply because there may be errors on your report that can be detrimental to your overall credit score. What's also important to know is that these errors can be corrected by you, but only if you catch them in the first place!

While every American is entitled to one free credit report every 12 months, knowing your credit score is a completely different matter.

Under the Fair Credit Reporting Act, a consumer is entitled to a free credit report (but not a free credit score) within 60 days of any adverse action (e.g. being denied credit, or receiving substandard credit terms from a lender) taken as a result of their credit rating. Under the Wall Street reform bill passed on July 22, 2010, a consumer is entitled to receive a free credit score if they are denied a loan or insurance due to their credit rating.

This is why it's beneficial to track and monitor your actual credit score through a third party service such as FICO. Click here to get your Free FICO Credit Score. Stay protected and save money in the long run!