Tip #12: Good credit can do wonders

You've all heard it, but having good credit can really save you a ton of money. You get better interest rates, you can qualify for better loans, and you never have to stress about whether or not your credit score is going to limit you in any way. It's worth working on, believe me.

My Story: When I first got married, I never really worried about my credit score. I had worked for a mortgage bank for several years and knew it was important, but did not think it would effect me anytime soon. As we started to apply for things like car and student loans we quickly figured out how important it can be. Luckily, our scores have both been really good. We always got good rates and really started to see how our score saved us.

I'm going to lay out a scenario for you now. It comes from Suze Orman's The Money Book for the Young, Fabulous, & Broke. "On a four-year, $20,000 car loan, we're talking about paying an extra $103 a month if your FICO score is in the 500-589 range rather than the top range of 720+. That's $1,236 a year, which comes to $4,944 over the four years of the loan."

$4,944 is a lot of money in an average 5-year car loan, but check out this site that gives a scenario for a mortgage loan. You could save $150,000 over the life of your home loan! http://www.bankrate.com/bosre/news/Financial_Literacy/June07_credit_score_savings_chart_a1.asp?s=1&caret=36d

To help with your score, make sure your credit reports are error-free. Go to www.annualcreditreport.com to see your credit report (not your score). To request your score, you'll need to contact the three different credit bureaus (Experian, Equifax, & TrasUnion). There is a fee for your score, but not your report. Even if you don't want to pay to see your score, AT LEAST make sure there's nothing on your report that does not belong there or is incorrect.