Your credit score will have a profound effect on whether or not you qualify for a loan, a credit card or some other form of credit. What's more, your score will influence the price you have to pay for that credit. The higher your score, the lower your interest rate. Your credit score can even have an effect on credit cards you already have. That's because some card issuers check your credit score before increasing your credit limit-or increasing your interest rate.

Fair, Isaac claims that, if your FICO score is 720 or higher, you will usually qualify for the best available interest rate on a mortgage. So, you don't need to improve your credit score if it's 720 or higher, since you're already getting the best deals on credit. However, if your score is 719, you will definitely want to take steps to boost it. The difference, in terms of cost of credit, between a score of 719 and 720 can be fairly substantial when it comes to borrowing money. And the difference between a score of 620 and a score of 720 can be really dramatic.

If you're looking at a 30-year fixed-rate mortgage of $200,000, the following chart shows the effect your credit score will have on the interest rate you receive, the monthly payment you'll have to make and the total amount of interest you'll pay over the life of the loan.

(The interest rates shown are averaged based on the rates offered by many different lenders. They are a snapshot and may not be timely when you're reading this book. But the comparisons should remain useful.)

So, if you have a score of 620, you'll be paying $86,103 more over the term of a 30-year loan than you would if you had a score of 720. And if you have a score of 520, you'll be paying $177,523 more than if you had a score of 720-not to mention $493 more each and every month.

What You Can Do

There are actually many things that you can do on your own if you whish to spend hours on the computer or at your local library. Fixing your credit or rebuilding your credit is not hard if you know the laws and have a lot of time on your hands, you see by investigating something on your credit report can actually hurt you. There are statue of limitations for certain items and if you open an investigation instead of that item being removed by the statue of limitations you actually may cause it to remain in effect even longer.

For example

if you have a collections account that was placed on your credit report on 2/10/00 and is scheduled to be removed on 2/10/07 but in 2006 you open an inquiry into that collections account you actually may cause that collections account to stay on your credit for an additional 7 years from your date of inquiry. The best thing is to leave it to the professional to help you fix or rebuild your credit. Any credit repair company that says they can remove everything and guaranties it to be removed is lying. True you can remove just about everything but there is no guarantee. It actually may take several attempts and there are secrets to the success, that professionals know. You should run your credit at least once every year from all three major credit reporting agencies. There are credit counselors and there is credit repair companies and then there are both. The secret is to find someone who is honest and discloses everything to you.

You should never sign a contract or agreement with such companies until the contract has been explained in full detail disclosing what they will do, what you get, the time frame, and any guaranties. Certainly NEVER give them any money until you have reviewed the contract and feel comfortable with signing it. My opinion is you should deal with someone who will help fix or rebuild your credit and also counsel you on how to be debt free or how to handle credit and debt. They should actually put a plan together for you. That is were we come in. Here at The Money Advice center, we strive on helping you. You see you can fix or rebuild someone's credit, but if you don't give them a plan to help them keep it clean. Well what good is that? You need to have a plan and goals.