15 Reason's Why You Should Start Repairing Your Credit






01  Save Money on Interest

Low credit scores typically mean higher interest

rates, and that means higher finance charges on

your credit card balances. Repairing your credit

would allow you to get a more competitive

interest rate and cut back on the money

you pay in interest.



02  Stop Paying High Security Deposits

Utility service providers and even phone

companies check your credit before allowing

you to establish service. To offset the risk of a

default, those service providers charge you a

deposit. Making your payments on time will allow

you to get your deposit back. Improving your credit

score keeps you from having to pay the deposit




03  Get a Lower Insurance Rate

Believe it or not, your credit affects your

insurance premiums. This includes auto, life,

and home insurance. A bad credit history

means you'll pay more for insurance than

you would if you had better credit.



04  Stop Paying Cash for Everything

If you have bad credit, you'll have a hard time

getting a credit card, which means you'll end

up paying cash for everything. It may not be a

nuisance until you need to do something like

renting a car, where you have to pay an extra

deposit if

you don't use a credit card.


05  Get a Higher Credit Limit

Generally, as you demonstrate you can pay your bill on

time, your creditors will increase your credit limit.

But, before a credit card issuer will check your credit

score before increasing your credit limit. A bad credit

history might get your credit limit cut hurting your credit

score even more by raising your credit utilization.


06  Stop Debt Collector Harassment

Repairing your credit includes paying off your debt collection accounts. Until you do, you face relentless calls and letters from debt collectors. While you can take action to stop debt collector calls, collection accounts often move from one debt collector to another. When a new collector gets your debt, you'll have to go through the process of sending letters to stop the calls all over again.


07  Feel Better About Your Credit Score

After you repair your credit, you won't have to be afraid of checking your credit score or worse, having someone else check it. You can have confidence knowing you have a healthy credit score.


08  Buy a New House

Homeownership has always been the American Dream. Bad credit is the nightmare that keeps you from realizing that dream. Many banks won't lend you a mortgage until you've repaired your credit. Those that will approve you with a high interest rate that makes home ownership cost a lot more.


09  Rent an Apartment

Not only can bad credit keep you from buying a home, it can also keep you from renting an apartment. Many landlords now check credit to determine the likelihood that you'll be late on your rent. Bad credit could get your rental application denied.


10  Buy a New (Or Newer) Car

Auto lenders are among the many businesses that check your credit before lending to you. Without a good credit score, your auto loan application could be denied leaving you to drive the same vehicle.


11  Get a Job

Employers check credit before deciding to hire you. Some government, financial, management, and executive jobs are particularly curious about your financial history. A bad credit history could cost you the job, or the promotion you've been working hard to get.


12  Take Some Financial Pressure off Your Spouse

When one spouse has better credit than the other, the spouse with good credit will be the one applying for the loans and credit cards. Improving your credit will let you bear some of the credit-brunt rather than placing it entirely on your spouse.


13  Stop Relying on Co-Signers

When you have bad credit, you'll often need others to co-sign for your loans and credit cards. If you can find someone to co-sign, you're putting financial pressure on them but they don't receive any of the benefits. Repairing your credit will save you the time and hassle of burdening someone else with co-signatures.


14  Start Your Own Business

Starting a new business takes money, so many entrepreneurs rely on small business loans to get their businesses off the ground. Bad credit can keep you from getting the financing you need to start your new business. You'll have to improve your credit before a bank will give you a loan.


15  Protect Your Children's Credit Score

Having bad credit can tempt you to use your child's credit. You might think you'd never do that but you never know what you'll do when you're desperate. Say you have to have electricity turned on, but your credit's too bad. You could easily rationalize using your child's credit to have the electricity turned on. Keep your own good credit and you won't think about exploiting your child

What goes into a credit score?



  Data from your credit report goes into five major categories that make up a  FICO score. The  scoring model weighs some factors more heavily,

such as payment history and debt owed.

  • Payment history: (35 percent) -- Your account payment information, including any delinquencies and public records.

  • Amounts owed: (30 percent) -- How much you owe on your accounts. The amount of available credit you're using on revolving accounts is heavily weighted.

  • Length of credit history: (15 percent) -- How long ago you opened accounts and time since account activity.

  • Types of credit used: (10 percent) -- The mix of accounts you have, such as revolving and installment.

  • New credit: (10 percent) -- Your pursuit of new credit, including credit inquiries and number of recently opened accounts.


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Here's How SELF Works's

  1. You apply for and open a credit builder loan at a bank, credit union or through Self. A credit union may also call this type of loan a share secured loan (being secured by your savings account).


 2. When your application is granted, the financial institution moves the loan proceeds you were approved for into a separate account, usually a savings account or certificate of deposit (CD). The loan amount tends to be between $300 and $1,000, though some banks offer credit builder loans as high as $2,500

 3. You then begin making your monthly payments for           the predetermined amount of time (the loan term).             The loan term can be as short as six months or as               long as six years.

 5. The bank, credit union or service provider reports               your monthly payment activity to one or more of

       the three major credit bureaus (Experian, Equifax,              Transunion). A credit bureau generates a credit rating        (also known as a credit score, based on your history         of  using credit).

6.Once the loan balance reaches zero, the service provider unlocks the CD or savings account and returns the total money the borrower paid, minus any interest and administrative fees.

Who should get a credit builder loan

The people most likely to benefit from a credit builder loan are those with a low credit 


Personal or demographic information such as age, race, address, marital status, income and employment don't affect the score.

Different score impact for same missteps

How much does a specific change affect a credit score? The answer is usually "it depends," and for good reason. Credit score developers don't reveal the exact point deductions. The weight of any given activity can also vary for different credit histories.

Within a scoring model there's more than one formula used to calculate a score, and each formula is designed for a category of consumers with similar credit profiles. The information in your credit report determines which formula is used. If you are new to credit, for instance, the scoring model will put you into a category for people with young credit histories, and use a scoring formula specific to that group. Such groups are called scorecards. Within that group, recent inquiries may cost more points than they would for a different group.

How to check your credit score

Federal law mandates the consumer's right to a free credit report annually from each credit reporting agency, but not to a free credit score. To get your exact number, you have to purchase it from a score provider, such as Privacyguard.com, Identityguard.com,or one of the reporting agencies.