There are five major benefits of having good credit and five surefire ways to improve your credit score.
Our preferred lender Lauren Williams is here today to help talk about five major benefits of having good credit and five great tips to improve your credit score.
First, here the five major benefits of having good credit:
1. It will lower the interest rates on the loans and the credit cards you get. If you’re applying for a mortgage, good credit will help with a wider range of mortgage offers. You can save 1% or 2% on the interest rates, which can save you tens of thousands of dollars over the life of the loan.
2. It will leverage your credit card rates and increase your buying power. The better your credit, the more bargaining power you have with your credit card company. They don’t want to lose your business, so they’ll lower your financing rate if you have good credit.
3. It will qualify you for lines of credit. If you’re looking to do a line of credit, having good credit will help you qualify with your bank.
4. It will help with rental approval. If you’re renting a home or an apartment, a good credit score will increase your chance of securing your ideal location.
5. It will lower your auto insurance rate.
Bonus benefit: It will open up better employment opportunities. Many employers nowadays check the credit of their applicants, so having good credit can make you look more responsible than those with a lower credit score.
Now that you know the benefits of having a good credit score, here are five ways you can increase yours:
1. Always pay your bills on time. This simple act done each month will build your credit and create great financial habits that will pay off in the long run.
2. Keep your balances low. Credit issuers often report your balance to credit agencies on a certain date, typically the last date of your billing cycle, so consider paying all or part of your bill before the closing date so the issuer will report a lower or zero balance. If you need, ask if you can make multiple payments per month.
3. Maintain a credit utilization rate of less than 30%. If your credit limit is $1,000, keep that balance under $300. If you want to get really aggressive, try and keep it around 10%.
4. Tackle your debt. Start with the highest interest rate card or loan, and once that debt is gone, pay down the next account with the lower rate.
5. Avoid using credit cards for large purchases. The compound interest can add up quickly, and it starts going against you if you’re trying to pay off that balance in a timely manner.
If you already have good credit, these tips will ensure that it remains high. Remember—financial institutions and employers put their trust in your credit score. It demonstrates to them that you’re both financially responsible and likely responsible in other areas of your life. In the long run, having a good credit score will save you money.
If you’d like to know more about how to increase your credit score, give Lauren a call at (714) 625-0130.
If you have any other real estate questions for me or you’re thinking of buying or selling a home, don’t hesitate to call or email me anytime. I’d be happy to help you.