In our previous postings about take advantage of savings (part 1, part 2) we were talking about how to do a little bit of a paperwork shuffle to get savings that you were most likely missing out on already.
This week we’ll take a look at more of in innards of you financial machine to see if by adding a touch of lube. (now I know all about the system that totally disregards borrowing money of any kind and disregards the FICO score, however in America your credit score seems to be tied to too much to just disregard it.)
Why is it so important to monitor your credit?
According to a report by the U.S. Public Research Interest Groups in 2004, one in four Americans had serious enough errors that would have resulted in a denial of credit. Even worse, 79% of those surveyed had at least some form of error.
Who’s checking your credit score these days?
- Potential Employers
- Banks (not only if you’re trying to refianace right now, but watch an inquiry show up if you open up a new checking account)
- Utility Companies (Electric, Gas, and others check and if they don’t like what they see then you’ll need to fork over a big deposit)
- Cable and Satallite TV providers (they want to know you’re going to be able to furfill your contract so they get their money back for the equiptment they gave you)
- Cell phone companies
- Car Insurance ( You Insurance rates can fluxuate based on your credit score and how their “computer” sees you )
- Home Insurance
- Landlords (if you’re moving around looking for a new place to rent – once again this can determin how much of a deposit you’ll have to lay out)
Here’s the breakdown of how Fair Isaac calculates your credit score:
The problem these days is that which score to use? Each of the 3 major credit beurus seem to have their own score calculating system. But most financial institutions, utility companies, and Insurance companies still use the FICO standard. This means that your score can only range from 300 – 800.
Adding Points to your score:
So let’s go over a few quick ways to start to add points to your score
Get a copy of your credit report and examine it for errors. (AnnualCreditReport.com is where to go to get a free copy – stay away from the site with the catchy jingle)
is another place to go to look at your credit report (and score) online for free. Once you’ve viewed your report then you can look for any inconsistancies and use the online tools to dispute any inaccuracies. Although this sounds great in theory this is sometimes harder then it appears. Companies can “prove” accounts with as little as dot matrix printouts showing the account number name and date which is easily available from the credit report itself.
Increasing Credit Lines. If you have credit cards in good standing then you can request the issuing bank to increase the limit therefore showing a better debt to available credit ratio.
Goodwill letters. Another technique is goodwill letters. writing a letter to one of the companies that has put a stain on your report is to write to them after a period of time has passed and request (in a very nice way) that they stop contesting the charges when you dispute the inaccuracy or to remove the negative item with all (or partial) payment.
NOTE: Since most goodwill letters offer a submission of guilt this should be one of the latter techniques used.
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