Save Money and Earn More With Good Credit Scores

Better Credit Equals Better Deals – On Everything

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A good credit score is decidedly a good thing, especially when it comes to making plans for major purchases. If you're getting ready to buy a house, send kids to college — or even considering refinancing your current home — ask yourself a couple important questions:

  1. What is my credit score?
  2. When's the last time I checked my credit score and report?

Your credit score ratings will always be a big determining factor in the financial decisions you'll be able to make. Bottom line — when you have a good credit score, it makes it that much easier to afford just about everything.

How can I best understand my credit score and how it affects my purchasing power?

Maintaining a good credit score is a lot like getting good grades in school. The more consistent you are, the more success you're likely to have. In fact, it might help to compare your credit score ratings to your preparation for a test. While "cramming" and procrastinating until just before test time might work for some, the smart money is on those who study every day — those who prepare carefully. It's the same for your credit. Don't wait to check your credit report and score until right before you're planning on making an important purchase — like applying for a home loan or deciding that you need a new car. Just as you must put in regular study time to be ready on test day, it's also critical to know those important facts about your credit history before you commit to making major purchases. So if you can remember to ask yourself, "What is my credit score?" every so often, your credit score ratings shouldn't surprise you. And the big-ticket items — or any items, for that matter — that you need or want will be that much more attainable.

If I know my credit score is good, how can I use that to my advantage?

If you know your credit score is high (a good credit score is typically above 700), be sure to be prepared to prove that to lending institutions, mortgage brokers and banks. When it comes time to meet on terms for buying a house, a car or expanding a line of credit, bring along documentation.

Here are just a few things you can do with a good credit score:

  1. Contact your credit card companies. If you tend to carry credit card balances, good credit scores may entitle you to lower those interest rates, enabling you to pay off credit card balances much more quickly.1
  2. Think about refinancing auto and home equity loans. Many financial experts say that these two types of loans may be the most influenced by good credit. A high credit score, for instance (say, over 750), could qualify you for an interest rate under 9%. By contrast, if you had a score of 650 (still a solid credit score), the best you might do could be about 12%, making your monthly payments nearly $100 greater on a standard 15-year loan.1
  3. Look for a better job. An increasing number of employers are pulling credit reports and scores these days to evaluate possible job candidates. Employers have a right to view the credit scores of applicants, and a good credit score can indicate a generally strong accountability, which might give those with good credit a decided advantage in the hiring process.
  4. Get a more competitive mortgage loan rate. The reality is that most mortgage lenders won't reward you simply for having a high credit score (e.g., you don't get extra consideration if you have a score higher than the minimum that's required). However, you can still make a particularly high score work for you. For example, if your ratio of housing expenses to income is above conventional standards and you can't make a down payment or document your income, having a credit score as high as 800 could still keep you in the best-price category, while a still-exceptional credit score of 720 might not.2

Showing lenders, creditors and banks that you have good credit isn't showing off — it's just good business. Better credit scores can lead to better financial deals. If you've paid close attention to your credit score information over the years and your diligence has paid off, let the powers-that-be know it. You've earned that right.

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