MONEY AND FINANCE

Avoid low credit scores at all costs. Poor credit scores cost you money. That is more than just a half-hearted statement. It is pure fact. Since most of us use credit to buy homes and automobiles for example, we sometimes forget we use credit for other purposes.

We do that when we use our credit cards. We charge airline tickets, rent a car and make hotel room reservations for example. How we repay the credit card charges serves in large part to determine our credit score.

Our credit score is a reflection of our credit history. If we didn’t pay on time or were continually late or made overcharges on a regular basis, our credit score is not as good as it should be. This could jeopardize areas we didn’t even think about.

Utility connections is a good example. All utilities review our credit score before they extend service. Insurance companies also do something called credit scoring. In fact, a poor credit score can mean a higher premium.

Let me add a note of explanation about utility companies. They have minimum standards for service connections. Part of those standards is a review of your credit. Therefore, if your report shows collection accounts for prior utility bills, they may not connect you.

On the other hand if they agree to connect you, you will pay a higher deposit than a customer with good credit. In fact, a customer with good credit may not need to make any deposit at all.

Telephone service falls under the utilities category. The phone company looks at your credit score and determines whether or not you will pay a deposit. Not only whether or whether not you will pay but how much.

Most of the time, people with a good credit history don’t need to pay deposits. This includes cell phone service along with home service. When you apply and are asked to pay a steep deposit, you will know that you have a poor credit score.

I mentioned insurance premiums above. Generally speaking people with good credit receive better insurance rates. Insurance companies have set minimum credit standards for the policy being requested.

If you have a poor credit score and you want to finance a home, expect to pay anywhere from to one to four more percentage points in interest. Mortgage lenders have been notorious for charging a heftier premium to those with poor credit.

It is easy to see that if you boost your credit score, you can save money in a variety of everyday living expenses. Not only everyday living expenses but areas like insurance and mortgage financing. The best cure is prevention. Avoid a low credit score. Make the necessary sacrifices now to ensure your happiness later.