Having a high credit score can help you in so many ways.
1. It will allow you to borrow more than someone with bad credit
2. It will allow you to borrow money at the best interest rate possible
3. Some employers look at your credit score when evaluating if they want to hire you
Here are some of the best ways to increase your credit score.
1. Pay your bills on time
2. Don’t revolve more than 33% or your available credit
3. Get a secured credit card from a bank. You give them a couple hundred dollars and they keep it in a cd (certificate of deposit) for a specific period of time. You typically cannot access this money during that time. However they will issue you a credit card that you can use and payoff every month. They will report your good payments to the credit bureaus and your credit score will improve. This is the least expensive way to build credit because you are using your own money. After a while don’t be surprised if credit card companies want to extend credit to you.
Here’s a real world example of why it’s good to have excellent credit.
327. 39 a month – You buy a $10,000 Car @ 11% interest for 3 years
288.61 a month You buy a $10,000 Car @ 2.5% interest for 3 years
= $49.78 a mo. x 36
= $1792.08 more for your car just because you didn’t have excellent credit. Grrr….
Here’s the scoop with credit scores. There are 3 credit rating agencies that keep tabs on all of us in regards to our financial lives.
They each come up with their own score. Whenever you try to borrow money the lender will look at the middle score as the one to base your creditworthiness on.
What are the different credit score categories?
Excellent credit score: 720 and Up
Credit scores in this range will offer the best interest rates and repayment terms for loans.
Good credit score: 680 to 719
A credit report score in the 680-and-up range is good. You can still get decent rates from lenders
Average credit score: 620 to 679
This is the absolute minimum credit score you can carry and still get fair interest terms.
Poor credit score: 580 to 619
You’ll probably have considerably higher interest rates on any credit that may be available to you. This is the lowest range you can be in if your looking for a car loan.
Bad credit score: 500 to 579
Not good. You should work to improve your credit score before attempting to get financing. Interest rates could be double that of people with “good” credit scores.
Miserable credit score: Less than 500
At this point, your credit score is so bad that getting any type of financing is almost impossible. Whatever terms you can get will be close to highway robbery.