Your Credit Score in 2009 - What You Should Know About Credit

What credit score will you need in 2009 to qualify for a mortgage loan? It's difficult to say here in the present, because our economy is in turmoil. But one thing is for certain -- home buyers will need better credit scores to qualify for financing in 2009 than they needed in the past.

Bad credit mortgage loans are a thing of the past, and rightfully so. So you must be financially responsible in the present if you hope to buy a home in the future.

Being Credit Smart in 2009

With that scary intro out of the way, let's start your credit-awareness program right away! Here are five more things you should know about your credit score in 2009 and beyond:

1. Your credit score is your key to financing.

When you apply for some kind of consumer loan, the lender will review your financial history to determine your "creditworthiness" (a fancy way to describe the level of risk associated with loaning you money). Much of their review will focus on your credit report and score -- and yes, they are two different things.

Your credit score is a number that usually falls within the range of 300 - 850. Higher is better. When you fall at the upper end of this range, you have a better chance of qualifying for car loans, mortgage loans, etc. When your score is low, however, you could have trouble getting approved for a loan.

2. After the economic crisis, good credit will be more important than ever.

As mentioned above, it has always been important for consumers to maintain a clean credit history and a high score. But in the wake of the economic crisis that came to a head in 2008, good credit will be more important than ever in 2009 and beyond. In the "new economy," lenders will impose stricter criteria on borrowers who seek financing.

I'm not gazing into a crystal ball here. I'm just looking at what's happening right now and projecting it into the future. We are already seeing this kind of trend in the finance world. The bottom line is that consumers with bad credit will face even more obstacles in the near future than they've had to face in the past. It's going to get tougher to obtain the best interest rates on a loan as well. So you need to maintain a good credit score!

3. You need to know what's in your credit reports.

It's not uncommon for errors to show up in a person's credit report. In fact, it happens quite often. It might be a simple typo within your personal data. Or it could be something more serious, like a credit account showing up that's not even yours. This might even suggest identity theft. So there are really two important reasons to know what's in your reports -- (1) to prevent errors from affecting your score, and (2) to spot instances of fraud.

By law, you are entitled to one free credit report per year, from all three of the companies that maintain them. You can learn more and request your information at the website AnnualCreditReport.com (a site that is jointly owned by Experian, TransUnion and Equifax).

4. Bad financial behavior in the present could follow you for years to come.

The financial actions you take now will show up on your credit report for a long time to come, well beyond 2009 for that matter. There are laws that require negative information to be removed after a certain period of time. But that period might be seven to ten years! So, for example, by falling behind on your bill payments here in the present, you could hurt your chances of getting a mortgage loan five or six years down the road. This underscores the importance of being financially responsible.

5. Most credit repair companies are scams -- you can do it yourself.

There are a lot of companies who claim to have the ability to fix all of your credit problems (if you have any). But these companies cannot erase the past. Most of them simply correct errors on their customers' credit reports, and that's something you can do for yourself. In fact, the FTC even warns against these so-called "credit repair" companies, because most of them are scams.

You can learn more about credit scores and how to improve them from this library of article:
http://www.cornettcommunications.com/credit-score.php

Related article: What is a good credit score by 2009 standards?