Today's money saving article for the average person is about your credit report. The first thing you should do 3 months before any major purchase is check your credit report. It is the be all and end all of how much you will pay for a loan or whether you can get a loan at all!
When my husband and I decided to buy our first house 7 years ago the first thing I did was check our credit report and credit score. I was shocked to find out that while we paid all our bills on time every time, the fact that we had credit card accounts with more than 30 percent of the total available credit on them knocked our credit score down by 50 points! In other words say we had a limit of $2000 on one credit card. We should not have had more than $600 owed on that card!
My husband and I never knew this and you can bet your boots the credit card compaines aren't going to tell you! So I quickly starting paying down our credit cards and was thrilled to see within 3 months our credit score jumped 100 points!
Now it is also important that you don't open more accounts or even let credit card companies look at your credit during these months before a big purchase. Every look at your credit brings your score down. Fortunately if you have say 2 or 3 mortage companies look at your credit with a two week period they only count that as one look. So time your shopping around and make sure everyone has their look with in that 2 weeks.
Pay down as much of your high interest credit as possible, but don't close those accounts! That will also bring down your score. I know this is a precarious game they are playing with your life, but you can beat the creditors at their own game!
Next make sure there is nothing on your credit report that doesn't belong there. I found an account that was not mine for a whopping $14,000! It took a bit of digging on my part and several phone calls across many states, but in the end I had it removed. Never take no for an answer and always ask to speak to a manager before wasting your time on 3 or 4 secretaries. This could save you a ton in interest on your next loan!
Next you need to make sure there are no unpaid city tickets, like parking tickets on your credit and if so pay them off or fight them. Be warned on this one. I tried fighting 2 duplicate tickets for parking in a street cleaning zone. I did not have proof of paying them 5 years earlier so I ended up paying 150 bucks again! In the end it was easier and shorter than trying to fight and win against the city of Chicago, especially when we were weeks from trying to by a house.
Once you have your credit paid down and anything that doesn't belong, wait a month and check your credit again to make sure everything is correct and updated. Then you can go out and shop for the best loan and interest rate knowing that you have prepared and will save a ton of money!
You are entitled to one free report a year and can also get a look at your credit report when you are denied credit. There is always a catch of course, like joining and then paying a monthly small fee. But if your credit is a mess this is a good thing. You will have access to your credit daily and can really work to fix any problems. If your credit is good and you don't feel you need a monthly subscription, then just make sure to cancel the next month. I did this and had no problem.
The credit reporting agencies are:
EquifaxPO Box 105873
Atlanta, GA 30348
800-685-1111 Experian
PO Box 2002
Allen, TX 75013
888-EXPERIAN (888-397-3742) TransUnion
Post Office Box 2000
Chester, PA 19022
(800) 888-4213
All three can be found at:
Mandi Gordon: Money Correspondent
Mandi's column, Saving for the Average Person, published every Thursday to Gather Essentials: Money is the average persons guide to saving money on any average day.
Mandi lives in Northern Illinois with her husband Bill and daughter Beth. She enjoys saving money
and sharing that knowledge with others. She knows there is enough confusing money info out there- it's time to start understanding and saving!
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Comments: 31
Thank you....great advice...
Enoch, nice to see you! thanks for coming over!
Just to clarify, it is true that inquiries into your credit for the purpose of obtaining a loan or more credit can adversely affect your score, but creditors "looking" at your score for pre-approval offers you get in the mail don't. These only hurt your scores if you take them up on these offers.
thanks for clarifying it though!
We have been thinking about moving for a while now. Almost moved to Delware this year but the job my husband was supposed to transfer to was given to someone else. We keep trying but it's not easy. My husband is afraid to risk too much because of the girls.
I hope we can too before the girls are too old to enjoy the backyard they keep asking for.
you're welcome Vickey!
I have now also finally accepted this to my "Everything" group, sorry for any delays...
Yes I do... All the way from A to E... :o) I try to keep the rules fair for those so I am not looked at like a hypocrite... I understand they seem brutal but I have at least started letting people know why I am rejecting a piece from my groups... So each group I own that piece was submitted to I am leaving them a approval or rejection (depending on which they qualify for) notice... And I figure too if someone who sees someones article especially the rejection notice and they saw it would understand as well how I decide on what gets approved and what does not. :o)