Whether you realize it or not, your credit report is a road map to financial success -- or frustration -- depending on what your report says about you.
Most consumers think of a credit report and their credit score in terms of whether or not they'll qualify for a home loan, car loan, or be approved for a credit card. While these are some of the most common credit score associations, there are other uses for your credit report.
Your credit report can impact other aspects of your life, too
For example, prospective employers might request a peek at your credit report to get an idea of how responsible you are by examining your payment history. Landlords that you want to rent from will also commonly ask to see your credit report. While late payments may not preclude you from getting the apartment, condo, or home of your dreams, collections and repossessions on your credit report just might.
Your credit report may also have some bearing on your insurance rates and what you'll owe your utility companies as a deposit. Insurance companies have statistically found that people with lower credit scores are costlier to insure, therefore consumers with questionable credit reports tend to pay more for auto and/or home insurance. Similarly, while a water or electric utility can't deny service to someone with poor credit history, they can require a large deposit before beginning service.
As you can see, having a high-quality credit report and credit score can make your life a whole lot easier -- and potentially cheaper.
A simple question could probably save you a lot of money
According to a newly released survey from online credit card marketplace CreditCards.com, an overwhelming majority of Americans who ask their credit card companies for concessions when it comes to high interest rates and credit card fees receives them.
CreditCards.com surveyed 952 American cardholders to find out if they'd ever asked their credit card company to get a late fee waved, avoid an annual fee, reduce their interest rate, or raise their credit limit. The results were astounding: 84% of requests were successful. Among the respondents CreditCards.com questioned:
- 87% received a late payment fee waiver.
- 69% received a lower interest rate.
- 89% were approved for a higher credit limit.
- 82% had their annual fee waived or reduced.
You'll note the particularly intriguing finding that 82% of people were successful in getting their annual credit card fee waived. Most consumers, as the survey notes, consider an annual fee as being built into the cost of a credit card. While premium cards with consumer-friendly points and cash-back perks might be less likely to budge on an annual fee reduction request, lenders will likely look at your spending with some degree of objectivity and either reduce or eliminate your fee if you're deemed valuable to the company. Plus, the worst thing your lender can tell you is "No," and there are far worse things than that!
It's also worth pointing out that 87% of respondents were able to get a late payment and fee removed from their account. If you have a long history of making on-time payments, creditors will often forgive a late payment as being out of the norm. And remember, the real reward of being granted a late-fee waiver isn't the $20 to $40 in late fees being waived, but the fact that you won't lose valuable points on your credit score that could potentially push your interest rates higher and hurt your future chance of getting a loan. A higher credit score means a potentially lower interest rate, which on a home could mean thousands, or even tens of thousands, in savings, all from requesting and receiving a late-fee waiver from your lender.
Furthermore, nearly 7 in 10 respondents were successful in lowering their interest rates. According to ValuePenguin, the average balance-carrying household had $16,048 in debt as of May 2016. A 1% move lower in APR means around $160 in annual interest savings, and the ability to pay down your principal even faster, which may be more worthwhile.
If you don't ask, you can't save money
Now for the most mind-boggling stat of all: Despite consumers' impressive success rate in getting fees waived and interest rates lowered, no more than 1 in 4 cardholders makes any of these requests, and only around half of all consumers have made any requests at all. In other words, if you aren't taking what amounts to a minuscule amount of your time and effort to ask for concessions from your lenders, you can't save money -- and the data appears to show the odds of a concession are clearly in your favor.
A key point presented in the CreditCards.com results by Bill McCracken, president of credit card market research firm Phoenix Synergistics, suggests that consumers don't realize their importance and worth to credit card companies. "It's more expensive for [credit card companies] to acquire new customers than it is to keep their current ones. So you should make these requests, because companies are going to do what it takes to keep you," said McCracken.
While we're on the topic, you should also be requesting a copy of your credit report annually from all three credit reporting bureaus at AnnualCreditReport.com. As a reminder, your credit reports are free once a year, and reviewing them can help ensure that there are no mistakes that could drag down your credit score and cause you to pay hundreds or thousands in added fees as a result of a lowered credit score.
As you can see, a little effort on your part can go a long way to bolstering your credit report and ensuring that you get to keep as much of your hard-earned money as possible.