Credit cards can be great. Having a credit card means you can order stuff online, rent a car, reserve hotel rooms and even pay for emergencies when they arise. Of course, to get credit cards, you must have at least decent credit.

Credit is also necessary for other kinds of financing too. And good credit means you can not only get financing for big purchases that you want or need like an automobile or home, but you will get better rates.

Thus, while bad credit can lock you out of certain big purchases because you won’t qualify for credit, it can also cost you A LOT MORE in terms of deposits, down payments, interest and fees to use that credit.

Aside from just costing you more on these consumer loans, your (bad) credit report can cost you in everyday living expenses too. Basically, what you don’t know about your credit could be costing you money—BIG TIME.

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

Here are some lesser known ways “bad credit” can cost you…

  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.
  1. The same requirements exist for telephone or cable services. People with a good credit history usually don’t need to pay deposits for home telephone or cell phone services. On the other hand, try to get them with bad credit and you might have to pay up to $300—PER LINE.
  1. What many people also don’t realize is that good credit enables them to get better insurance rates. High-quality, low-cost home owner’s 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.  Furthermore, many automobile insurance companies now base your monthly premiums on your credit score.  Most of 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.
  1. Bad credit can cost you a job. More and more employers run an applicant’s credit report during the interview process and hire the person with better credit. They are assuming that better credit equals better integrity and character.
  1. Poor credit scores, of course, also mean you will 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 for a 30-year, fixed-rate mortgage might carry an interest rate of about 5.72%. This would be a payment of around $870 a month. On the other hand, poor credit scores raise the interest rate over 9 percent and the payments to 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 and save about $330 each month.

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There are many ways you can improve your credit score. One of them is to own a couple of credit cards and regularly make payments on or pay off your balance, covering more than the minimum due, to show that you are reliable and can be trusted with credit. If you do this routinely and don’t let other accounts go delinquent, your credit score will reap the rewards.

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Your credit score gives you buying power and determines how much you will pay for that buying power now and over time. Increasing your score just a few points will make a difference in both of those areas too. If your credit score is high enough, you’ll have no problem qualifying for lenders’ best rates on everything from credit cards to auto financing, home loans insurance and even small business loans should that be a goal or desire.

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