Improving credit score saves you thousands!
Of all the trouble-free ways to save money, improving your credit score is perhaps the most important. From home loans and car loans to credit cards and auto insurance, a good credit score can save you a lot of money over the years. Over a lifetime, the savings can easily reach tens of thousands of dollars. People with great credit scores can actually get lower interest rates on car loans.
If you have a low credit score don’t be fooled by the “pre-approved” offers you get in the mail. These offers are VERY easy to take advantage of, but more often than not they are taking advantage of you! Some of those have interest rates over 50%!
Here are a couple of tips for improving your credit score:
Take These Steps to Improve Your Credit Score
- Pay your bills on time. If you are 1 day late with your bills they can report this to the credit agencies. A great way to make sure you are paying on time is to set up automatic payments. (see below for a cash back option)
- Keep balances low on credit cards and other revolving credit accounts like store credit cards. Only use store cards if you can pay them off right away. I have a Kohl’s card so that I can get 30% off, but whenever I use it it’s only for something that I can afford to buy without the card, and I pay it right off.
- Apply for and open new credit accounts only as needed. We’ve all been there, a huge car repair bill, a medical bill, etc… those are times when getting a credit card night be needed. Just remember to pay them off as quickly as possible.
- Before buying something on credit ask yourself if it is absolutely something you need! Do you really need that new TV?
- Pay off debt rather than moving it around. Who hasn’t ever had to do this? Sometimes there are easier ways. Set a budget, call your creditors and talk to them. Don’t just pay off one bill with another. I have found in my life with a child with lots of medical issues, that it’s a lot easier and cheaper to negotiate medical bills with the doctor’s office, rather than putting it on a higher rate credit card. It doesn’t hurt to ask, right?
Be sure to teach your kids about using credit wisely!
If you have good credit, there are a several of cash-back credit cards that pay up to 5 percent on purchases or even give you points toward travel. It’s vital however, to use the card only for monthly bills and everyday expenses, not to charge things you don’t need. You can put monthly bills that accept credit cards on automatic payment, and use the card for everyday purchases such as groceries and gas. If you go this route make sure you are paying off your card every month. It would be horrible to mess your credit up by accident when you’ve been working so hard on it!
7 Tips to Help You Repair Your Credit Score
There are a lot of services out there that promise you that they will be able to help you repair your credit score, but they’re going to charge you an arm and a leg to do it for you. As a frugal person, I’m here to tell you right now that you don’t need anyone to help you repair your credit score, because you can do it on your own. That’s exactly what I did when I used to have a bad credit score, but I was able to correct it.
If you’re curious as to why you should worry about your credit score, you should look over some of my past posts on how a good credit score can be very beneficial to you. Basically, having a good credit score will help you save money in a lot of areas in your life, so it’s important you take good care of your score. Below, I’m going to go over some tips that will help you repair your credit score. Scroll down to get started.
#1. Dispute Claims
It’s very important that you dispute claims with all three of the credit bureaus. If you’re lucky, you’ll be able to knock a lot of the items off of your credit score that you’re disputing. When a credit bureau isn’t able to verify a claim on your credit report they have to knock it off.
#2. Dispute via Snail Mail
A lot of people have moved onto the digital age and they’d rather dispute things online, rather than going with good old fashioned snail mail. Yeah, it may be more convenient, but you’re not going to truly receive any sort of documentation that is a record of when the dispute was received. Also, you won’t be able to dispute certain things online, either. It’s important that you go the snail mail route, so you have a paper trail and you’re able to provide physical documentation that will help you backup your disputes.
#3. Be Persistent
It can take a long time for your credit score to start going up, so you can’t allow yourself to become unmotivated or give up. Don’t be surprised if it takes as much as year for you to see any progress. Stay persistent, take a step at a time and it will be worth it.
#4. Get a Free Copy of Your Credit Report
Every year you’re allowed to receive one free copy of your credit report. I highly suggest that you check out your credit report every single year and take advantage of this freebie.
#5. Go Over Your Report
It’s important that you look at your credit report and take note of any errors or inaccuracies. Make sure you take notes of them.
#6. Document Everything You Do
It’s important that you take notes and make copies of every single thing you do. That way, you always have physical proof of your efforts.
#7. Play the Waiting Game
Once you send in your dispute, the CRA has 30 days to respond to you. They have to include proof in their response, as well, in regards to the inaccuracies you’re disputing. If they don’t provide you with proof in 30 days, they have to remove the inaccuracy from your account.
How Having a Good Credit Score Can Save You Money
Having bad credit is one of those things that stuck with me for a very long time. At first, I didn’t really know how important credit was, but I learned very quickly. Having no credit or bad credit can really become a financial burden rather quickly and can impact your life in numerous ways. Therefore, it’s very important that you establish good credit, so lenders know that you’re trustworthy. Below, I’m going to list out some areas where having good credit can save you money and you’ll see why your credit score is so important.
Better Financing Options
This is one thing that you probably know about, but you don’t know how just a few points can really make a huge difference on how much money you pay for something that you’re financing. The better your credit score, the lower interest rates you will receive. Chances are, you’ve seen those commercials about new cars and how you can get some amazing financing options on them, but did you even bother to check out the fine print on those ads? If not, you should definitely check those out next time, because not everyone is going to get that amazing deal.
For example, if you were able to get a car financed for four years ant the loan was for $17,000 at 3.9% interest, you would end up paying out a total of $18,388 for the vehicle over that amount of time. Now, let’s say your credit score wasn’t that great and you got an interest rate of 6.9%, you’d end up paying $19,502 for the vehicle over time.
Now, do you want to see something even crazier? Let’s talk about a mortgage loan. If you financed a $150,000 home for 30-years at an interest rate of 3.5% you would end up shelling out $242,483 for the home by the time you paid it off. Now, if you got it at an interest rate of 5.5%, you’d end up shelling out $306,608. Those are some pretty drastic changes, huh?
Better Insurance Rates
Did you know that insurance companies check your credit score when determining how much your rate will be? The better your insurance score, the better rate you will receive. It’s estimated that drivers that have a credit score of over 750 will save as much as $800 more than drivers that have an average credit score.
No More Deposit Fees
Do you know how some people have to put down a deposit for things like utilities or cell phone bills when they’re starting up a new plan? Well, people with good credit scores will often times not have to put down a deposit at all. This is because companies will look at your credit score and if you have a good score, they’ll waive your deposit fees. This could end up saving you hundreds of dollars.
Increased Chances of Successful Price Negotiating
If you have good credit, you’ll definitely have a better chance when it comes to negotiating prices on certain things. For instance, are you trying to get the price lowered on an automobile? If so, you’ll have a better chance of getting a better rate versus someone that has a poor credit score.
Easy Ways To Build Credit
Credit can be a pretty scary thing but it doesn’t have to be. You see, with all the options that you have available to you, it’s now easier than ever to to build credit or take control of your currently bad credit. If you scroll down, you’ll see that we’ve put together a list of tips that will allow you to build credit even if you’re doing this for the first time. Are you ready to get started? Great! Because so are we. Now, scroll down and we’ll get started.
Credit Cards
The first way that we recommend building credit is also one of the most common ways of doing it. Yes, credit cards. Don’t be scared though. As long as you play your cards right and are smart with your money, credit cards can be an effective (and safe) way to build credit. There are also a lot of credit card companies out there with special programs in place to aid those who don’t have any credit yet as well as those who simply have bad credit.
Cell Phones
Another good way to build credit is with a cell phone and why not take advantage of this? Odds are, you have a cell phone or need one anyways so you’d be getting the best of both worlds. Some providers will require a hefty down payment if you don’t have credit but you will usually get it back about 6 months into the contract and it will work wonders for your credit. Be sure to check around for the best prices possible and see what you can find.
Loans
This isn’t the best way to build credit but it is still an effective method. If you do go this route, we hope that you’ll pay close attention to interest rates, terms, and don’t get too carried away. If at all possible, try going to a local finance company and taking out the bare minimum which is usually around $300. Use that money for whatever you need to and make the monthly payments. Once you’re done, your credit should improve pretty decently.
Utilities
Finally, the last way that we have for you to build up your credit is through something that anyone has to pay. Utilities! Not all utility companies report to credit but there are some out there that do. Contact some of your local utility companies to see if they are one of them and if they are, consider making the switch unless they are already your provider. If they are, then at least you know that while the lights on, you’re also building credit.
Now, you’re ready to get out there and build your credit up like never before! It does take time so try to be patient and not get too frustrated if you don’t get immediate results. A good rule of thumb is that it takes about a year to build any significant amount of credit unless you have a bunch of accounts open but if you play it smart and give yourself a couple of years to build credit, it’ll work out very well for you. Good luck and enjoy your credit!