Credit Scores


It’s pretty common knowledge that your credit score will affect your ability to get a loan, but there are some everyday living factors that your credit score can affect too.  For instance:

Insurance rates: Believe it or not, the amount of insurance you pay can be directly tied to your credit score. Great score equals lower rates while poor score equals higher rates. Every state doesn’t allow this, however.

Approval for an apartment: Is there an area you’ve been wanting to move to for a while? Well, many apartments use your credit as a means for adding stipulations to your application.  Poor credit may equal higher deposit or monthly payment in general just to offset any “risk”.

Utilities: Once you move into your new place, your score can make it difficult to have your utilities turned on. A bad credit score could mean you have to pay a huge deposit to turn on those necessities like lights, water, and gas.



If you’ve let your credit score hit the dumps, there are some areas in your life that it may affect. Most people already know that poor credit makes it tougher to get an installment loan or mortgage. But, there are other issues that can come up too, for instance getting a job.

Although it may seem irrelevant for an employer to judge you based on your credit score, some do. Anything from legal issues to habitual missed payments may send a red flag up to employers. The good news is there are some states that have outlawed this practice. You’ll just have to check and see if your state is one of them. Even if employers aren’t allowed to judge you for your credit, some agencies can refuse to license professionals with poor credit.

For those who want to go the independent route and start their own business, it’s important to have good credit too. If you have bad credit, it can affect your ability to get a small business loan.



Keeping a clean credit history makes life a whole lot easier. Whether you’re trying to get a car, apartment, job or loan sooner or later someone will use your credit history to judge you. But let’s focus on how your credit score can affect your ability to get a loan. Getting a loan such as a mortgage or installment loan are the most popular reasons for improving and maintaining good credit.

With poor credit your chances of getting approved are slim and if you do manage to get approved, you will have to pay back astronomical interest rates. Other drawbacks of trying to get a loan with shaky credit include:

  • Needing a cosigner
  • Putting up collateral

Having to jump through these extra hoops can be stressful and even embarrassing (especially if you need a cosigner). You may also have do a little more to get the loan, such as find a cosigner or put up collateral. Your best bet is to start now working on cleaning up your credit.



If you read Part 1 on Realistic Steps To Fixing Your Credit Report, then you know that you need to look at a copy of your report and challenge any errors that you see. Now, let’s move on to two other realistic steps you can take in order to fix your credit report.

  1. Ask for a goodwill adjustment: A goodwill adjustment is when you ask your creditor to remove negative information from your report. They aren’t obligated to do it, but they may if you still have a business relationship with them.
  2. Try to get ahead of default: If you know that you’re likely going to default on a loan, contact your creditors ahead of time to see what you can do. They may give you a grace period, which is better than just being late without any excuse. This course of action has to be done before you default.

If you put these steps into action today, you’ll find your credit score increasing in no time.



A poor credit score can take the groove out of things in your life. Instead of being approved instantly for a loan, you’re treated like an irresponsible person. Even if you were irresponsible at one point in your life, something on your report from seven or eight years ago shouldn’t still haunt you.

When you’re on the mission of trying to clean up your credit report, here are some action steps you want to take.

  1. Get copies of your credit report. Take a look at your credit report and see what’s real and what’s not. Some items could be an error that’s pulling your score down. There could be items that should have dropped off your report years ago.
  2. Fix errors. When you see something that isn’t accurate, contact the credit reporting agency and let them know about it. You will need to probably send them a formal letter with your name, address, item in dispute, and any facts you have to back you up. Then you need to ask them to resolve the issue for you.

This is part one on steps you can take to fix your credit report. Check out Part 2 for more.



When you’re ready to clean up your credit report, it can be confusing to know where to start. Depending on how bad it is, you may find yourself struggling to figure out whether you need to call the creditors yourself or just ignore it hoping that it’ll go away. Cleaning up your credit report will give you a higher FICO score, so ignoring it isn’t the best option.

That’s why many find themselves turning to credit repair agencies in hopes of letting someone else handle the problem for them. Credit repair agencies are okay, but be careful. There are several scammers out there ready to prey on those who are desperate to clean up their credit. Scammers will charge you expensive upfront feels and in return promise to remove the following items:

  • late payments
  • foreclosures
  • bankruptcies

They tell you that in 6 months to a year your score will be back to 700 when in reality, nothing ever happens.

A better credit score means better interest rates on mortgage loans, car loans and personal loans. So, do what you can to improve your score, but be careful how you start.



Part of being financially responsible involves staying on top of your credit report. Your report shows you what’s been reported by creditors and should never be taken lightly. It will include everything from missed payments and account balances to charge-offs and credit inquiries. Gaining access to your credit report isn’t as troublesome as it used to be. There are plenty of places that will allow you to check your report and score regularly – for free – including the one’s below:

  • Annualcreditreport.com – The government requires all credit bureaus to give you a free credit report at least once every 12 months.
  • Creditsesame.com – Provides updated scores at least once per month.
  • Quizzle.com – Offers a credit once every 6 months and is based on your Equifax credit report.
  • Credit Karma – Offers your score based on Equifax and Transunion. It is updated pretty regularly.

Many of these sites will send you free alerts whenever something new shows up on your report. You may want to sign up for more than one website too just to keep track of the differences.



Everyone is pretty familiar with what a FICO credit score is. But there’s a new credit scoring agency in town, and in the next few years it may replace the FICO score all together.

What most people don’t understand is that there are many agencies who produce credit scores. FICO is just the most popular one used. But in the past several years, lenders have been using a consumer’s VantageScore to determine credit worthiness.

VantageScore is a relatively new credit scoring agency designed to give more choice in the marketplace. VantageScore is growing in popularity mainly due to its simplified scoring method.

For consumers with weak credit history, this may be a good thing. This company looks back at the past 24 months of a person’s credit history, while FICO may go back decades. This is useful for a borrower who may have had derogatory marks made years ago. This is also perfect for someone who is just establishing credit for the first time.

Keep in mind that Vantage scores won’t wipe away a track record of bad credit. You still have to prove you’re financially responsible. The goal here is to level out the playing field more in the favor of borrowers.



Need to rebuild your credit? There are several ways to go about improving it. Some are obvious, some not as obvious. Here are two in particular that most people aren’t aware of:

  1. Go to a bank or credit union and get a prepaid credit card. This is where you give them $300 of your own money up front and they give you a credit card with a $300 limit. Spend $50 on this prepaid card and make the payment to the bank at the end of the month (basically back to yourself). This comes up as an additional good account on your credit report. This simple prepaid card could take a 570 credit score to 620 in a matter of months!
  2. Another way to build credit is to live within your means. Essentially, don’t buy what you can’t afford. Just because you’re approved for a loan doesn’t mean you should take the full amount. If anything were to happen to your finances, you don’t want to be on the hook for several debts.


One of the biggest mistakes people make when trying to be ‘responsible’ with their credit is using too much of it. Most people believe that if they use their credit cards to the max and pay it off at the end of the month, this helps build credit. This is not true. This actually looks as if you’re overusing your credit, thus it’s not building it.

This is called credit utilization percentage and it’s one of the largest factors when it comes to maintaining and improving your credit score. For example, if you have a $1000 credit card and you charge 400 on that $1000 credit card, your credit card utilization rate is 40%. This is considered really high and will hurt your credit.  The best thing to do is not overuse your credit. Also, do not close cards that you aren’t using any longer. Keeping them open gives you a higher availability of credit, meaning lower utilization rate.