3 Ways a Higher Credit Score Can Save You Money
Want to know how a higher credit score can save you money? Most people have heard about the importance of building a healthy credit score, but surprisingly few know what it’s all about, let alone what it takes to raise it. This article will explain how to raise your credit score in a nutshell, as well as three significant ways it helps millions of Americans save money.
Basically, your credit score can be raised if you followed the following tips:
- Pay your bills on time – every single one of them
- Only use less than 30% of your available credit (e.g. credit cards)
- Start building credit as early as possible
- Constantly build new credit accounts, or regularly make credit inquiries
- Diversify your credit usage among mortgage, credit cards, car loans, student loans, etc.
Now, here are three ways a higher credit score can save you money:
#1: It Can Get You Better Mortgage Deals.
Your home will be one of the biggest purchases you’ll ever make in your life. And if you have a high credit score, you can stand to save up to $100,000 or more on your home.
Let’s say you pre-qualified for a $400,000 fixed home loan for over 30 years. At a credit score of 620, you’re likely to get an interest rate of about 5%, which over the course of 30 years will make you pay almost another $400,000 in interest alone.
But with a high credit score of 780, you can qualify for a rate as low as 3.5%, which over 30 years will only amount in roughly $300,000 in interest. That’s savings of around $100,000.
It’s best to start bringing your credit score up as early as you can, so that when you’re finally ready to get a home loan, you can get the best rate and save thousands of dollars.
#2: Better Rates for Student Loans
Likewise, your credit score can dictate how much money you can save when paying for student loans. Rates vary widely between lending companies, but here’s an idea: On a 10-year fixed rate deal, the rate can be as low as 4.7% or as high as 6.5% per year.
What’s more, most companies that provide student loans have a minimum required score from applicants. To be safe, keep your credit score at 725 or higher.
#3: Better Rates for Credit Cards
Again, your credit card interest rate will vary between companies – normally between 10% and 23%. If you have a high credit score, you can more easily negotiate a higher credit limit and a lower interest rate. And when the unthinkable happens and you can’t pay off your outstanding balance right away, a low interest rate will help you pay it off in less time, and with less money.
Build Your Credit Score Now.
Building a healthy credit score is one of the most important financial efforts you’ll ever make in life. The sooner you build it, the more money you’ll save in the long run – quite possibly in the hundreds of thousands of dollars, or even more.
For assistance with credit repair or for a free financial consultation, contact Credit Absolute today at (480) 478-4304