Credit Score - How Poor Credit Scores Can Costs You More|Credit Repair

How Low Credit Score Can Cost You Extra Money

In this credit based economy, most of us need a good credit report to obtain credit cards, personal loans, business loans, automobile financing or even to purchase a new home. 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.

The convenience of having a credit card means that you can purchase everyday things like baseball or movie tickets, rent a car, and reserve hotel rooms.

But did you know that your credit history can be a factor in whether you get good telephone rates, utility connections, a good home owner's insurance rates, the best auto insurance or even whether you get hired or not?

#1. Telephone services for instance check your credit history and offer you a service accordingly. People with a good credit history do not need to pay deposits for home telephone or cell phone services. With bad credit history you can pay as much as $400 as a deposit of just one cell phone. Whereas with a good credit score, you can obtain as many as you want with zero deposits.

#2. Also, some utility companies set minimum standards for service connections. If your credit report shows a number of unsettled accounts for prior utility bills, you may not be eligible for service at all. You will need to pay a higher deposit than another customer with good credit if utility companies do agree to connect your service.

#3. In addition, good credit enables you to get better insurance rates. High-quality, low-cost home owners insurance, auto, and term 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 auto insurance companies now
based your monthly premiums on your credit score; these companies offer you as much a 20% 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.

#4. To add to this, 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. So 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.

#5. 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.

If you have got bad credit score, you can boost your credit score by making bill payments on time. This can dramatically improve your rating and eventually you can save money on everyday expenses, get high-quality insurance, and the best mortgage financing.