Most consumers know that a good credit score is important when applying for a mortgage loan. But how many consumers know that a top credit score can also mean lower rates when they’re applying for auto insurance? It’s just one more reason that consumers should be focused more than ever on credit repair; your three-digit credit score truly impacts every facet of your financial life. You need that score, then, to be as high as possible.
Controversial Measuring Stick
Not everyone is thrilled that auto insurers rely on credit scores when determining how much money their clients pay for insurance. Critics say that consumers’ credit scores have no relevance on how safely they drive their cars and other vehicles. Count legislators in Washington State in this group: Members of the state Senate earlier this year tried to pass a law that would have banned insurers from using credit scores to set prices and underwrite policies. The bill died in committee in early February, meaning that Washington insurers don’t yet have to change their ways.
The Importance of Credit Repair
The Washington State example should once again highlight to consumers just how important their credit scores are. These scores, also known as FICO scores, are designed to tell lenders and other financial service providers how well you’ve managed your money in the past. If you’ve run up huge amounts of revolving debt your three-digit FICO score will fall. If you forget to send in your student-loan payment or skip your credit-card payment your score will fall. If your score drops by too much, your life might suddenly become more difficult. Mortgage lenders may not lend you the money that allows you to buy your first house. Auto lenders may be happy to give you a loan, but they’ll make sure that you pay sky-high interest rates for the privilege. You may not even be able to qualify for a new credit card. Fortunately, if your scores are down, some simple credit repair tips can help bring them back up.
Repairing Ailing Scores
If your credit score falls under 620, you definitely need to engage in some credit repair. First, never pay a bill late again. Making your monthly payments on time, all the time, is the surest way to steadily increase your credit score. Next, pay down your revolving debt. Finally, order free copies of your three credit reports from AnnualCreditReport.com, and search them for any errors. Notify the bureaus in writing to erase the error from your record. Credit repair is far from a fun or quick job. But if you have the patience to turn your financial life around, you’ll soon find that everything else becomes a bit easier.