Repair/Improve Your Credit Score

Your Credit Score (also known as FICO score) can have a significant impact on your financial life.  Most of us know that it influences whether you get approved for credit cards as well as the interest rate that you pay on those credit cards. But your credit score often effects terms of car loans, home loans, car insurance, renter/home owner's insurance, whther you will have to pay a deposit for utilities, and a number of other monetary matters.

The bottom line is, if you have anything on your credit report that is dragging your score down, it's usually worth the effort to fix it. Below is a link to an eHow article I wrote for an easy way that most of us can fix/repair our credit on our own. If you have the time, try this method BEFORE paying someone else to help fix your credit. It's fairly easy to do this yourself.

How to Repair/Improve Your Credit

Once your credit has been repaired, and your score has improved, you can try a number of things that may save you money every single month.

Rebid your insurance policies. Your car insurance policy is probably the most expensive policy you carry (except for health insurance if you have it) and you will probably see the most savings from shopping your business out again.  Progressive, GEICO, and Allstate all have pretty easy online quoting. (My experience with Allstate is that their online quote was not at all competitive with Progressive and GEICO, but the next day I received an email from a local Allstate agent with a new quote that was much closer to the other two.  I wonder if they do this to take advantage of the suckers who don't shop around and just assume that their quote will be competitive and sign up right away online?!  If so, pretty slimy.)

If you carry a balance on a credit card and the interest rate is high (over 12.99% per year), consider applying for a new credit card that has both a special introductory balance transfer offer, and an attractive ongoing offer for regular purchases. Two things to watch for when doing this. Many credit card companies will charge you a transaction fee of 3 - 4% of the amount that you transfer. Some will cap this at a certain $ amount (like $75), others will not, and still others will waive the transaction fee altogether. Ideally, you want this transaction fee waived, but be aware that if you transfer a balance for a special 3.99% APR and pay a 4% transaction fee to transfer the balance, at the end of a year you have actually paid 7.99%.

The other thing to keep in mind with credit cards is the amount that you are transferring and the length of the promotional offer. Some cards will give you a choice between two different rates. One will be really low for a short period of time (around 4-6 months), the other may be slightly higher but for a longer period of time (say 12-18 months or even permanent as long as you don't miss any payments).  If you are transferring a large balance that will take you a long time to pay off, it may be the better move to pay an extra 1 or 2% for the extra time to pay down your balance. Remember, when the promotional period is over, that balance will jump to something in the neighborhood of 12% - 23%.

Finally, do NOT miss any payments. Almost all of these credit card companies have a clause that says that if you are late on or miss a payment, your promotional APR will go away and you will be stuck paying a not so fun rate. Consider signing up for autopay if they have that feature so that at LEAST the minimum amount due each month is automatically pulled right from your bank account. As long as the money is in your account, you should be in good shape.