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Use Your Free Credit Reports to Find Your Rating and Save Hundreds in Interest Payments

If you use a credit card on a regular basis, you should know how important it is to develop a good credit rating. Unfortunately, you are not told your current rating each time you use your card. Unti recently your credit report was hidden from you. Only people in a position to loan you money could access those reports.

Recent changes in the law now require your credit report to be accessible to you. You can get your credit report online and find out how the credit companies view you. The credit companies use your FICO score, which will generally be somewhere between 600 and 850 for a normal person. A rating of 620 may be paying 2% higher interest rates than a person with a 840. When we're talking about a fixed-rate 30-year mortgage of $150,000, the difference is about $200 every month. That's the kind of difference your credit rating can make.

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Your score will not change while you stare at it on a screen. The way you increase your score is by building good credit. Make all of your payments on time. When you know you can make the payments on your credit card, use your credit card instead of cash or check. I know people who only use their credit card to pay their cell phone bill, and it is done automatically from their bank account. This can slowly increase your rating.

The basic lesson here is increase your credit rating by using your credit card and paying it off on time, and check your credit reports to know where you stand. You may even find that an error has been made. It will be a hassle to fix, but it can be done, and it's worth it if it saves you hundreds of dollars every month.