What's Your Credit Score? (and what does it mean?)Written by Carole Talley
Anyone applying for a mortgage will probably hear term "credit score" mentioned at least once, and you'll ask "What's my credit score?" Depending on where you live, you may or may not get a straight answer. Some lenders or credit companies may tell you that they cannot legally release it to you, which is not true. The law does not prohibit release of this information. However, in most states, lenders and mortgage professionals are not required to tell you even though many times that is primary consideration being used when extending or refusing you credit.A "credit score" can carry a lot of weight. It can be used to determine size of your loan, terms on which money is lent to you (i.e. interest rate, length of time to repay, and whether or not you're offered a long-term fixed or short-term variable rate), amount of related fees, and your ability to purchase mortgage insurance. In long run, your credit score can cost you quite a bit of money. For example, inability to purchase mortgage insurance could mean that you'll have to bring a larger downpayment to closing table when purchasing a home. Or, an individual with low credit scores can expect lenders to charge him higher interest rates because lenders feel they are taking a greater risk with him. Lenders are concerned with only one question: "will you repay me as agreed or will you default?" Credit scores are considered good predictors of a consumer's ability and willingness to repay. A lower score predicts that you're more likely to default, so they charge a higher fee (interest rate) to loan you money. That higher interest rate could make a big difference in amount of money you pay out each month for housing and that translates into thousands of additional dollars paid over life of your loan. If your credit score is really low (520 or less), it can even be single determinant used to deny your loan application without considering anything else about you or your credit situation. So, as you see, your credit score can be very important. The state of California recently passed a law mandating that credit score information be given to prospective borrowers if they ask for it. Other states, as well as federal government, are considering passing similar legislation. So, if you're in California and applying for financing, ask for your credit score and an explanation of how it's being applied to your application. For rest of us, here's more information about credit scores and ways to improve yours as much as possible. A credit score (also called a FICO score) is a computer-generated numerical grade given to each consumer based on a wide range of criteria. This grade is used by lenders to predict their risk in doing business with you by analyzing your past behavior. FICO scores are generated and released through big three credit reporting bureaus. Each bureau has a name for its credit/FICO score. They are as follows: Equifax calls it a Beacon score, TransUnion calls it an Empirica score, and Experian (formerly TRW) calls it a Fair Isaac score. FICO scores can change day to day depending on what information is reported to credit bureau(s). The information used to calculate your credit score is widely varied, but each factor is given a numeric equivalent and added into equation. Some of thirty or so factors used to figure a FICO score are: time on job; how long you've lived at your current address; how many and what types of accounts you have; how high your account balances are; how much unused credit you maintain each month; age or newness of your accounts; and of course, negative factors such as too little or too much credit, too many inquiries in last 90 days, late payments, collections, consumer credit counseling, judgments, bankruptcies and foreclosures.
| | IRS Free File Is Not A Free-For-AllWritten by Wayne M. Davies
Looking for a way to reduce cost of income tax preparation this year? Then you came to right place -- maybe!The IRS has launched a new program this year -- it's called "Free File", and it enables you to prepare and e-file your personal income tax return online for free. But, alas, there is no free lunch and likewise this "free" program isn't really free for everyone. You have to meet certain eligibility requirements to take advantage of Free File, so read on! Simply put, Free File is a new government program that enables certain qualifying individuals to both prepare and e-file their income tax returns for free -- online. The IRS has entered into a partnership with 17 private tax software companies who each offer their services to public at no cost. But here's catch: not everyone qualifies, and each of 17 software companies has different eligibility requirements. Generally speaking, lower income people qualify, as do people of certain ages and those who live in certain states. (Gee, sounds confusing, doesn't it? Guess that's why it's a government program.) There are 3 main requirements. You only have to meet one of these criteria to qualify: 1. Income -- if your income is below following amounts, you qualify. Take note: there are several different qualifying amounts, depending on software vendor. TurboTax -- $27,000 FreeTaxReturns.com -- $28,000 H&R Block -- $28,000 TaxBrain -- $12,000 CompleteTax -- $33,000 Efile-Tax-Returns.com -- $28,000 FreeTaxUSA.com -- $30,000 TAXSLAYER.COM -- $30,000 TAX$IMPLE -- $28,000 Free1040TaxReturns.com -- $25,000 ezTaxReturn.com -- $40,000 TaxEngine -- $9,200 Only one vendor allows you to qualify if your income is above a certain amount. TaxACT.com is free if your income is greater than $50,000.
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