Money Saving Wednesday…FICO Score

One of the best ways to save money is to protect your credit score. If you should need to borrow money for an emergency your interest rate is largely based on your current credit score. Many are talking about jumping into the housing market now and purchasing a first home. If you have a down payment, a steady job AND a good credit score this might just be the time. If your credit score needs a little fixing, now is the time to do that, before you really need that loan.

First, get a copy of your credit report. If you haven’t done this in the past it will be free. Contact all three credit reporting agencies Equifax, Experian, and TransUnion.

Second, closely examine all three and correct any mistakes. Be persistant and make sure it gets done.

Third, work on increasing your score:

Pay off credit card debt. Begin with the card with the highest interest rate, pay it off and file it away. Do not use it again for any reason. Be sure as you are paying off one card you are also remaining current on the others. Reporting agencies will place a great deal of weight on the card you have held for the longest period of time. Never let your oldest card fall behind. You will want to remain in good standing with that company.

Bring ALL your bills current and keep them that way. Even if you are only making minimum payments make them on time.

Do not negotiate down your credit card balances. This is a huge sign that your finances are on the ropes. If you have to,m you have to, but immediately stop buying anything on credit and begin rebuilding your scores.

Do not apply for any more credit. Don’t apply for a car loan, another credit card…nothing. It is so easy to get sucked in at the store when they ask if you want to save 10% on today’s purchases by applying for a store card. DO NOT DO IT!! No more credit.

Start a savings plan. For small emergencies you should have cash on hand. We have talked n the past about how to save money on your expenses and we will continue to do that. As you learn trip for spending less begin a systematic method for saving more.

Now is the time. The economy will get worse before it gets better. Those of us who prepare now and learn to live frugally will come through this and come out on top.

One Response to “Money Saving Wednesday…FICO Score”

1. Laree says:

   March 19, 2009 at 12:01 am

   Very good advice, with one note:

   After you pay off that highest rate card, pull it out twice a year and charge a candy bar or something on it. Total credit is a big portion of your credit score, and many card issuers will cancel your card for inactivity after a certian period. So, lock it up, buy a treat, and PAY IT OFF!