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Your Credit Score: How it affects your budget

March 12, 2010 By Kelly 5 Comments

This is a guest post from Clover Mortgage.

If you’re watching your dollars and budgeting carefully, you probably don’t want to use any credit, but at some point it can become unavoidable.

You may find yourself needing a new car, or your employment could demand a move to a new city where you’ll need to purchase or rent a home. Or worse, something unexpected could happen and give you no choice but to use a credit card. While we should have an emergency fund in place, few of us actually budget for items such as the transmission going out of the car when we’re on vacation 200 miles from home, or the furnace blowing up when the mercury is reading ten above zero. Some large expenditures simply cannot be delayed.


If you’ve kept your credit scores up and carry a low-interest credit card, you can recover quickly. Your payments will go toward paying down the debt rather than paying high interest charges.

If you’ve had to use a high interest credit card for an emergency expenditure, get that balanced transferred immediately. (Kelly’s note: Do the math, some credit card companies charge large fees for transferring balances) Compare credit card offerings and choose one with no annual fee and an introductory rate of 0% for the first 6-9 months. Then budget to pay off the balance before the interest rate resets.

233Unfortunately, many who watch their money conscientiously are carrying low scores in spite of their good habits. People who always pay cash fall into this category, as do those whose credit reports contain errors. According to credit industry executives, over 70% of all credit reports do contain errors. Finally, careful spenders with high credit scores can become prime targets for identity theft, and not realize it until extensive damage has been done.

That’s why, after meeting countless conscientious consumers whose poor credit scores prevented them from getting good home loans, Clover Mortgage created the website www.CreditScoreQuick.com. Here individuals can browse through hundreds of articles on how to create, maintain and protect good credit scores; can learn what criteria the credit bureaus use to determine their scores; can learn the steps for correcting credit report errors; and can order a free copy of their own credit report with scores.

Kelly’s notes: Despite not using our credit often I do carefully monitor our credit score and report. You can use AnnualCreditReport.com to get free credit reports, and CreditKarma.com for a free score based on TransUnion’s score.

My husband and I recently learned firsthand that credit scores can vary hugely between the 3 agencies. While applying for our car loan the dealership had us a full 50 points lower than our credit union who we had pre-approved us. The difference in interest rates was huge. Our car loan rate would have been 4-5% higher based on that number! That’s thousands of dollars over the course of our loan.

We don’t currently use a pay service to monitor our credit scores/reports, do you?

Disclosure: This is a sponsored post. For more details, please visit my disclosure page.

Creative Commons License photo credit:  me and the sysop

About Kelly


Kelly Whalen is the founder and editor of the Centsible Life. She started the blog in 2008 as her family faced a mountain of debt and the fixer upper they purchased became a FIXER UPPER. The website was born out of her desire to share what was working (and what was not) on her family's journey to financial security. Kelly lives in Minneapolis with her family.

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Filed Under: Guest Post Tagged With: credit report, credit score, Guest Post


Comments

  1. Amanda says

    March 14, 2010 at 3:02 pm

    You should check out daveramsey.com He has an awesome how to get out of debt baby step program. It doesn't cost anything (you can listen to him on a.m. radio, through fox business on tv, or get his books from the library) It's not a get rich quick program, but small steps that will take you out of debt–including an emergency fund so a credit card isn't needed–even for when you need a new car or the transmission goes out. I was skeptical at first but it honestly works. We've paid off $55,000 in a year with a $95,000 income. You owe it to yourself to check it out!

  2. Amanda says

    March 14, 2010 at 3:02 pm

    You should check out daveramsey.com He has an awesome how to get out of debt baby step program. It doesn't cost anything (you can listen to him on a.m. radio, through fox business on tv, or get his books from the library) It's not a get rich quick program, but small steps that will take you out of debt–including an emergency fund so a credit card isn't needed–even for when you need a new car or the transmission goes out. I was skeptical at first but it honestly works. We've paid off $55,000 in a year with a $95,000 income. You owe it to yourself to check it out!

  3. Evolution Of Wealth says

    March 12, 2010 at 2:34 pm

    I'm a huge fan of creditkarma.com and quizzle.com. I like being able to get my credit score for free and with creditkarma.com I will check it about once a month. Iget my free credit reports as often as I can and that's pretty much how I monitor my credit report. I don't pay for anything. Of course I had a great conversation with someone the other day about how to improve your credit score and it made me realize that paying someone to help could definitely be worth it.

  4. Evolution Of Wealth says

    March 12, 2010 at 7:34 pm

    I'm a huge fan of creditkarma.com and quizzle.com. I like being able to get my credit score for free and with creditkarma.com I will check it about once a month. Iget my free credit reports as often as I can and that's pretty much how I monitor my credit report. I don't pay for anything. Of course I had a great conversation with someone the other day about how to improve your credit score and it made me realize that paying someone to help could definitely be worth it.

Trackbacks

  1. First Time Home Buyer Tips – San Diego says:
    March 13, 2010 at 3:30 am

    […] Your Credit Score: How it affects your budget […]

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Hi! I'm Kelly Whalen, writer, frugality expert, debt slayer, and money nerd. Welcome to the Centsible Life, my corner of the internet, where I help women live happier, healthier, and wealthier lives. My goal is to help you save time + money, so you can spend both how you want.

Want to know more about me and learn how Centsible Life has helped readers like you? Click here.

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