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By Aleksandra Todorova
Reporter, SmartMoney.com
All it takes is one little drop in your credit rating to spark a surge of lender notifications about higher interest rates, lower credit limits and denied applications. Fair Isaac's FICO score, which most lenders use, rates consumers' creditworthiness on a scale of 300 to 850 -- 850 being a perfect score. On a $300,000, 30-year fixed-rate mortgage, someone with a solid score of 700 could snag an interest rate of 5.99%, translating to a monthly payment of $1,797. Lose just one point, and you'd get a less favorable rate of 6.27% and pay $19,800 more in interest over the life of the loan.
Ironically, consumers with good credit have more to fear than those who already have a blemish or two on their record. "The higher your score, the farther it can fall," says Craig Watts, a spokesman for Fair Isaac. "[One mistake] suddenly puts you in a very different category of consumer."
To avoid falling from grace, make sure not to make any one of these five mistakes.
Reporter, SmartMoney.com
EVERYONE MAKES MISTAKES, but those that hurt your credit score should be avoided at all cost.
All it takes is one little drop in your credit rating to spark a surge of lender notifications about higher interest rates, lower credit limits and denied applications. Fair Isaac's FICO score, which most lenders use, rates consumers' creditworthiness on a scale of 300 to 850 -- 850 being a perfect score. On a $300,000, 30-year fixed-rate mortgage, someone with a solid score of 700 could snag an interest rate of 5.99%, translating to a monthly payment of $1,797. Lose just one point, and you'd get a less favorable rate of 6.27% and pay $19,800 more in interest over the life of the loan.
Ironically, consumers with good credit have more to fear than those who already have a blemish or two on their record. "The higher your score, the farther it can fall," says Craig Watts, a spokesman for Fair Isaac. "[One mistake] suddenly puts you in a very different category of consumer."
To avoid falling from grace, make sure not to make any one of these five mistakes.
