Things a Better Credit Score can Buy (Part 1 of 2)

 You've had credit problems, but you've worked hard to repair the damage, scrimping where you could, restraining your impulses and mailing every bill early.  Now what?

For one thing, you'll have an easier time borrowing more money.  But you could also use your newfound status to lower your current bills.  Credit scores, those three-digit numbers that lenders use to gauge your creditworthiness, can affect everything from what you drive to where you work.

Fixing your credit is a big job.  If you're still working on it, you'll find credit-burnishing tips in my book "Your Credit Score: How to Fix, Improve, and Protect the 3-Digit Number That Shapes Your Financial Future."

But if you've just rescued your credit rating from the basement, it's time to put your newfound clout to good use.

Call your credit card companies

If you still carry credit card balances, your improved scores may entitle you to lower rates that can help you reduce your financing costs and pay off the balances more quickly.  Don't expect your credit card issuers to volunteer lower rates, though.  You'll have to negotiate for them and, perhaps, be willing to transfer your balances to other cards if necessary.  Here's an idea: If you've been sent low-rate offers in the mail, have those on hand when you call your card issuers and ask them to match the offered rates.

Remember that you'll have the most leverage if your FICO credit scores are 700 or above.

Credit cards for people with poor credit often come with high fees and less-than-attractive terms.  Be cautious about closing old accounts, however, since doing so can actually ding your scores and undo some of what you've already accomplished.

Call your insurance companies

In most states, insurers are allowed to use credit information to determine customers' premiums.  If your scores have improved, you may be able to win breaks on your auto and homeowners coverage.  Of course, your state may not allow insurers to use credit information; California and Massachusetts ban the practice, while several other states impose restrictions.  Still, it could be worth a phone call to find out if your premiums have been affected by your credit.

If your insurer happens to be one that doesn't use credit as a factor, you might want to consider shopping for one that does.  Why?  Your newly burnished scores could entitle you to lower premiums at a company that rewards good credit.

Consider refinancing auto and home-equity loans

These two types of lending are among the most strongly influenced by credit scores, so better credit can win you dramatically better rates.  Someone with excellent credit scores of 750 or above, for example, could qualify for a rate under 9% for a $50,000 home-equity loan.  Someone with scores 100 points lower, by contrast, might pay a rate 3 percentage points higher, according to MyFico.com.  The difference in monthly payments would exceed $90 a month on a 15-year loan.

The catch: You typically have to have some equity in your home or car to convince a lender to replace your current loan with a better one.  That means you have to owe less than your car or home is worth.

If that's the case, though, contact your current lender to see if you can get a better deal.  Also shop around with other lenders, including your local credit union, but do so in a concentrated period of time.  Auto- or mortgage-related credit inquiries made within a short period of time -- typically 45 days -- are counted as one inquiry and won't have much impact on your scores, but if you drag the process out for months you could actually do damage to your numbers.