With most Americans struggling financially, have a good credit score has become a privilege. However, finance experts note that many consumers are not making the most out of this privilege. Experts tell consumers that there are several ways to cash in on their good credit, so they must know the tips and tricks.
Credit scores are not only used to determine interest rates on loans. They are also used to calculate how much a driver pays on his auto insurance or how much a landlord would charge his renter. Experts note that landlords often ask for a security deposit, an amount of money they require from boarders, just in case they miss a payment. Landlords naturally ask for bigger deposits from people who have low credit scores. But once they improve their ratings, experts say boarders can already ask some portion of their security deposit back.
As noted by specialists, the average rent for metropolitan areas as of April 2009 is $1,500, and getting some of the deposit money back is a huge plus. Experts advise consumers that while they are at it, they might as well negotiate their rent.
Car and home owners who have seen their rating go up are also advised to take advantage of the improvement by shopping around for cheaper policies. Industry experts explained that carriers compute premiums through insurance score, a consumer rating method largely based on credit. If their current provider refuses to give them discounts until they renew their policies, consumers are advised to switch to other insurers.
Another way that experts cite for consumers to cash in on good credit is through piggybacking. But unlike previously mentioned methods, this one is a more direct way of cashing in on a good credit score. A consumer with a good score does it by helping another consumer who has a bad rating. The consumer with good rating will add another person in his card account as an authorized user so he can benefit from the good credit. According to an online company, consumers can usually earn $200 through piggybacking. Earlier this year, Fair Isaac Company announced that its new scoring model, FICO08, does not penalize consumers who sell their score. Advocates say it is good news for consumers since it will encourage them to manage their finances better.
Fair Isaac, the developer of the most widely used consumer rating method, also remind consumers that the small difference between a bad and a good score could mean a 4% difference on interest rates.
