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Is Your Credit Score Costing You Money?
Most of us want a good credit report to obtain automobile financing, credit cards, and to purchase a home. But, beyond these consumer loans, your credit report can cost you in everyday living expenses. What you don't know about your credit could be costing you money. Having a credit card means that you can order tickets, rent a car, and reserve hotel rooms. Besides these conveniences, your credit report can mean that you must pay higher deposits and fees for everyday services. Did you know that your credit history can keep you from getting utility connections, good telephone rates, the best auto insurance, home owner's insurance, or even keep you from getting hired? Some utility companies set minimum standards for service connections. If your report shows collection accounts for prior utility bills, you may not be eligible for service at all. And if utility companies do agree to connect your service, you'll need to pay a higher deposit than another customer with good credit who may not need to make any deposit. The same requirements exist for telephone services. People with a good credit history don't need to pay deposits for home telephone or cell phone services. When we first got a cell phone with poor credit scores, we had to pay a $300 deposit, for one cell phone. After fixing our credit, we got eight cell phones for our business, with zero deposits. What many people don't realize is that good credit enables them to get better insurance rates. High-quality, low-cost home owners' insurance, auto, and life insurance companies set minimum credit standards for their policy holders; this means that consumers with poor credit have to pay more for less coverage. Many automobile insurance companies now base your monthly premiums on your credit score; these companies offer a 17% discount if your score is over 625 and a 25% discount if your score is over 725. Why? Because according to their studies, people who are careful with their credit are also careful with their property and careful drivers. Bad credit can cost you a job. More and more employers run an applicant's credit report and hire the person with better credit, assuming that better credit equals better integrity and character. A friend of mine with a Master's Degree and a 4.0 grade average did not get hired; she was told her credit score didn't meet their minimum standard and that they hired another person with less education. Poor credit scores means you pay more for your home financing. Mortgages cost more in upfront fees and interest rates for those with low credit scores. How much can you save? A mortgage loan of $150,000, 30-year, fixed-rate mortgage, interest rate of about 5.72 percent costs around $870 a month; poor credit scores raise the interest rate over 9 percent and the payments over $1,200. As you see from these payment differences, good credit means that you can finance a more expensive house with the same income, or save $330 each month. Boost your credit score so you can save money on everyday expenses, get high-quality insurance, and the best mortgage financing. (c) Copyright 2005 Jeanette J. Fisher. All rights reserved. Jeanette Fisher, author of "Credit Help! Get the Credit You Need to Buy Real Estate," is on a one woman mission to help people buy their dream home or finance multiple investment properties. Jeanette teaches real estate investing and interior design psychology. For help with your credit, visit the Real Estate Credit Help Center at http://www.recredithelp.com
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