Whether you are paying interest on a bank loan or a credit card, the total costs of your purchases can jump significantly once interest is factored in. For people looking to build their wealth, having to continuously pay interest charges is lost income that could have been put towards investing. The twofold outcome here is that money is being used to pay down your debt, dwindling your savings, while the earnings that could have grown through investing are missed.
This is why having a good credit score matters. Scores range from 300 at the lower end, meaning you have bad credit and higher interest rates, and 850-900 at the higher end, which means you have excellent credit and lower interest rates. Having banks view you as a good client and investment has a huge impact on your interest payments, and how quickly you can payoff your debt and build your savings. Knowing how to maintain and build a good credit score is thus of the upmost importance. There are a few tricks to make sure you get favorable interest rates by having a good credit score:
• Start Early! This isn’t just about paying off your debt. You have to demonstrate you are good with your money and paying off debt over the long run.
• Pay your bills on time: Having a solid credit history, and minimizing delinquent payments will have a deep impact on your score. Timeliness makes a huge impact here.
• Don’t max out your credit card: This decreases your score. Remember to pay off your debt and keep it low.
• Build your credit history: This is really what you are doing throughout this process and what the banks are looking at.
• Apply for multiple loans in a specific time frame: Your credit score decreases every time your score is accessed. Having it accessed in a single period by multiple people will treat these views as a single inquiry.