Why Your Credit Score Matters – Part I

Investopedia reports –

“In recent decades, consumers have become increasingly dependent on credit. When you use credit, you are borrowing money that you promise to pay back within a specified period of time. Having lenders extend you credit is a great privilege. If you have a good credit rating, enjoy it. Also, use credit responsibly. Credit is fragile; one slip up can create major problems; you can harm your credit rating without even being aware of it. Therefore, it’s crucial that you understand your credit report.

Your Credit Rating Is a Critical Part of Your Life

Few things in life follow you as your credit report does. Your credit report and rating compose a financial snapshot that presents you to the business world. Your financial history can affect how easily you can get a mortgage, rent an apartment; make big-ticket purchases; take out loans, and in some industries even get hired. When you apply for a credit card or even a cable hookup, lenders check your credit rating. Your credit rating helps to determine the probability that you could and would pay back the money that you have borrowed; it also indicates the degree of risk that you pose to a lender.

Increased credit risk means that a risk premium must be added to the price at which you borrow money. If you have a poor credit rating, lenders may not shun you; but instead, they’ll lend you money at a higher rate than that paid by someone with a better credit rating. The hypothetical data in the table below show how individuals with varying credit ratings can pay dramatically different interest rates on similar mortgages. The difference in interest, in turn, has a great impact on the monthly payments.”

Just think about how much of your hard-earned money you could keep by simply having a better credit score. For the example below, just improving your credit score from the 500 – 559 range to the 720 – 850 range, would save you a WHOPPING $139,320.00 dollars over the life of the very same 30 year mortgage. Why would you ever agree to throw that money away? And what would you do with an extra $139,320.00 dollars?

Why would you ever spend any more than you had to, right? Let our experts help you improve your credit score, and put your money back into your pockets.