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Home » Business And Finance Articles » 5 Ways Poor Credit Scores Costs You Extra Money

5 Ways Poor Credit Scores Costs You Extra Money

Most of us want a good credit report to obtain automobile financing, credit cards, and to purchase a home. But, beyond these consumer loans, your credit report can cost you in everyday living expenses. What you don't know about your credit could be costing you money.

Having a credit card means that you can order tickets, rent a car, and reserve hotel rooms. Besides these conveniences, your credit report can mean that you must pay higher deposits and fees for everyday services.

Did you know that your credit history can keep you from getting utility connections, good telephone rates, the best auto insurance, home owner's insurance, or even keep you from getting hired?

1. Some utility companies set minimum standards for service connections. If your report shows collection accounts for prior utility bills, you may not be eligible for service at all. And if utility companies do agree to connect your service, you'll need to pay a higher deposit than another customer with good credit who may not need to make any deposit.

2. The same requirements exist for telephone services. People with a good credit history don't need to pay deposits for home telephone or cell phone services. When we first got a cell phone with poor credit scores, we had to pay a $300 deposit, for one cell phone. After fixing our credit, we got eight cell phones for our business, with zero deposits.

3. What many people don't realize is that good credit enables them to get better insurance rates. High-quality, low-cost home owners' insurance, auto, and life insurance companies set minimum credit standards for their policy holders; this means that consumers with poor credit have to pay more for less coverage. Many automobile insurance companies now base your monthly premiums on your credit score; these companies offer a 17% discount if your score is over 625 and a 25% discount if your score is over 725. Why? Because according to their studies, people who are careful with their credit are also careful with their property and careful drivers.

4. Bad credit can cost you a job. More and more employers run an applicant's credit report and hire the person with better credit, assuming that better credit equals better integrity and character. A friend of mine with a Master's Degree and a 4.0 grade average did not get hired; she was told her credit score didn't meet their minimum standard and that they hired another person with less education.

5. Poor credit scores means you pay more for your home financing. Mortgages cost more in upfront fees and interest rates for those with low credit scores. How much can you save? A mortgage loan of $150,000, 30-year, fixed-rate mortgage, interest rate of about 5.72 percent costs around $870 a month; poor credit scores raise the interest rate over 9 percent and the payments over $1,200. As you see from these payment differences, good credit means that you can finance a more expensive house with the same income, or save $330 each month.

Boost your credit score so you can save money on everyday expenses, get high-quality insurance, and the best mortgage financing.

Copyright © 2006 Jeanette J. Fisher. All rights reserved.

And here is another random article you might be interested in...

How To Buy An Apartment Building

How to buy an apartment building? You could start with a look in the newspaper, a visit to a broker, or a search online - all good ways. Of course, since you're looking at the same properties as every other investor, it's not always easy to beat the competition to the great deals. Is there a better way?

Why not look for properties that aren't yet for sale, and make an offer? This is how I bought my first home. An ad in the paper stating what I was looking for, brought a call from an old couple that had been thinking about selling. I got a good price, and they saved a real estate agent's commission. Trying to buy an apartment building this way may be even more likely to succeed.

Buying apartment buildings that aren't for sale starts with a three step search process. you first decide what you're looking for. Do you want duplexes and four-plexes, or larger apartment buildings? The second step is to start looking for properties that fit your criteria. Finally, you contact the owners.

How To Buy An Apartment Building From Non-Sellers

First of all, don't limit yourself to "fixer-uppers" or other "problem" properties that seem more likely to have owners willing to sell. Probably most owners of rental properties have thought of selling, so you can start with almost any building. How can you tell when or why a landlord is ready to call it quits? By asking.

Of course, tact is necessary. When you call the owner, tell him you're an investor, not a broker. Tell him you like what you see, and you can have an offer ready in a week if he's interested. What if he's not interested? Thank him politely and hang up, but send him your card or a letter. Investors often buy from owners that change their minds.

If the owner is interested, explain that you are an investor, so your offer will have to be based on your return on investment. That means you'll need to see the books, specifically the rent roll, listing the units and what they rent for, plus current occupancy. You'll also need the total income and operating expenses for the last year.

Pepare a confidentiality agreement ready before you call, and let the owner know you'll sign it and deliver it before you see the books. It's possibble he doesn't want the tenants to know he's thinking of selling. If so, inspecting the units may have to wait until you make an offer. Just make an acceptable inspection a contingency in the offer.

Why should you buy income properties this way? Because having no competition and no sales commission can mean a better price. Because instead of waiting for that perfect property to be listed for sale, you just find it now. Look for it, find it, and make an offer. That's how to buy an apartment building.