Raise Your Scores and Cut Your Costs

Approximately 75 percent of major insurance companies adjust your premiums according to your credit score.

Consumer advocates have filed class actions in several states, arguing the link between credit scores and insurance premiums unfairly discriminates against low-income buyers. They have good cases, but the legal process will take several years. Similarly, several prominent Congresswomen have introduced legislation to outlaw linking insurance with credit, but the legislative process also will take several years. While you wait, you can take five significant steps to control your insurance costs and improve your credit:

• “Bundle” and adjust your coverage—If a poor credit score has raised your insurance premiums, recoup some of the increase with two fundamental strategies: First, “bundle” all your insurance with just one carrier; then, increase your deductibles and cut the frills in your policies. Most insurance companies cut your premiums by 10% just for having all your coverage in one place. Some companies offer considerably larger discounts for bundling, so you may want to seize this opportunity to shop the competition and regroup everything in a new place. Hint: if your carrier does not offer a “loyalty” or “longevity” discount, you have good incentive to go. Other hint: As you look for places to scale-back your coverage, repeatedly ask, “Could we pay for that ourselves if we had to fix it?” When you answer “yes,” cut the coverage.

• Cut insurance costs with safety measures—First, make a “budget-safety” maneuver: List the driver with the best safety record as your “primary driver” on your insurance policy. Then, launch a household safety campaign. A few little changes around the hacienda and on the old family truckster can save big dollars. Adding fire extinguishers, a carbon monoxide detector, an extra smoke detector, more safety lights, and an alarm system can cut your homeowner’s insurance up to 25%. Similarly, adding an alarm and a GPS system to your car can cut auto insurance premiums by 15%. Taking a defensive driving course can lop-off another 10%–maybe more if you and your teen driver take the course together.

• Drive safely, and drive less—One major insurance company now offers a “snapshot” program that enables you to document all your safe driving practices for the sake of cutting your premiums; find out what your company can do when you prove your safety-consciousness. Then, not only for the sake of your insurance premiums but also for the benefit of your Mother Earth, cut your monthly mileage by 25% or more, because the substantial reduction of your annual mileage will take a big chunk out of your auto premiums. Discover public transportation, carpools, and the joys of walking and bicycling.

• Check and correct your credit reports—You may request one free credit report every year. Do that. More specifically, request a report from each of the three reporting agencies. Expect the reports to look very different, because agencies collect information from different sources. Examine each report with a microscope, finding and correcting even the most miniscule errors. Negotiate directly with your creditors, demanding they correct their mistakes and send you written proof of the changes. If they fail to comply, add explanatory notes to your report, and complain to management at your recalcitrant creditors. As you look at your reports, especially keep a look out for extremely old derogatory reports. Some consumers find incorrect information more than a decade old. Do not, however, fall into an obsession with your credit report: don’t sign-up for a regular credit reporting service, and don’t check your credit report too often. You just waste time and money with subscription service, and you forfeit points when you make too many inquiries.

• Improve your credit score— Most American families have watched their credit scores decline as the Great Recession has squeezed their budgets beyond the breaking point. If you haven’t already seized an opportunity for carefully crafting a detailed, disciplined family budget, do it now for the sake of getting the household economy under control and raising your credit scores. Consider, first, what it will take to pay all your monthly bills exactly on time. Some of your creditors count you “late” if your payment does not arrive exactly on the due date– even while they allow a grace period. Second, consider what it will take to match all your expenses to the experts’ percentages? Do you pay less than 40% of your monthly take-home pay for housing; do you pay less than 12% for your car? Learn the proper fractions and make your spending fit.

CNN and Money magazine recently ran features on “radical downsizing,” showing how the Great Recession has inspired upper-middle class families to give up their extravagances and restructure their household economies. The strategies make great sense, and several apply here: They advise you to dump the luxury cars; you can eliminate your monthly payments and go for overall economy. They similarly advise you to sell luxury items that add to the cost of your homeowner’s insurance; do you really need a mink coat and the crown jewels? As Christine Romans frequently reminds, “Smart is the new rich.” Use your insurance premiums as motivation for applying your financial wisdom to all your routine expenses.

Christopher Jensen is a writer and car enthusiast offering advice on how to get auto insurance quotes from different florida auto insurance companies to compare rates.

Explaining Home Loans For People with Bad Credit

Blue Trust Loans

Let’s face it, applying and getting qualified for a home loan in today’s market is already tough enough. For people with ‘less than perfect’ or even ‘bad credit’, the experience can be literally heart breaking. If you’re thinking of getting a home loan and you already know that your credit isn’t as great as you would like it to be, arm yourself ahead of time with the best and only weapon you have at your disposal, “KNOWLEDGE”!!

Knowing what you’re up against ahead of time and all the little ‘ins & outs’ in bad credit home loans will at the very least, level the playing field when sitting across the desk from a loan officer scowling over the top of his/her glasses, looking down at your credit report. It is a lot less nerve racking if you already know exactly what it is he/she is seeing in that report, so before you walk in his/her office, you should get a copy of current Fico score. This is what banks and loan companies look at to determine the level of risk involved in granting you a loan. You want to be able to point out and explain any negative marks against you, as well as point out how you have began to improve on making payments on time and even some older charges that you have recently paid off. This will show that you are not only aware of your credit situation, but also that you are trying to turn it around and improve your Fico Score.

Once you have received your Fico Score, another stumbling block you will encounter is whether or not you qualify for an unsecured loan. This is a loan without having to use anything for collateral. Without a pretty high Fico Score, banks and other loan companies usually look towards secured home loans for people with bad credit. Meaning you can expect to need some sort of collateral in order to qualify for the home loan.

Other things you need to know in advance is that bad credit home loans always come with higher interest rates. Typically the interest rate on a home loan with less than perfect credit can be upwards of 7% or even as high as 9-10%, compared to the 2-5% that people with good credit pay. Unfortunately in the ‘money borrowing game’, being poor is very expensive! Another aspect of this is you can also look forward to paying the higher closing cost that will be added into your loan. And if you think that’s hard to digest, ask the loan officer to explain the oddest ‘fine print’ in the loan agreement, pre-payment penalty. That is the penalty the bank or loan company will charge you if you try to pay off the loan early!

So as you can see, it is not a good idea to go around applying for a bad credit home loan without first doing your homework and preparing yourself for all the things you are going to have to face. There is a whole lot that you can do to make the experience a little easier. Arming yourself with the knowledge of what to expect before you sit down at the loan officer’s desk is by far the most important.