When you apply for major purchases such as a home, car or even credit card, lenders judge you by your credit score to determine "credit worthiness"
Those 3 little numbers which make up your credit score, will determine if you keep or save BIG money as a borrower. So pay attention because credit scores and interest rates are sneaky creatures!
You see, many borrowers – who would otherwise be a low credit risk to any lender – screw up and blow their credit score and get high interest loans by being lazy or by making critical but preventable mistakes.
Typically, a very good credit score is considered to be over 700 – which basically deems you as "golden" in the eye of the lender. As a borrower 700 should be your credit score GOAL.
You may not realize that preventing your credit score from dropping can be accomplished!
Consequences of Lower Credit Score
Lower credit scores mean higher interest rates for you the borrower.
For example, the difference between damaged (below 550) and very good credit (above 700) will cost you BIG.
The difference in the interest rates offered to a person with a score of 520 and a person with a 720 score is 4.36 percentage points, according to Fair Isaac's Web site.
Here's an example:
DAMAGED CREDIT – You're in the market for a starter home and end up with a mortgage loan of $ 100,000 at 12% interest for 30 years. Your payment will be $ 1028 (PITI) monthly. Over the life of the loan, you will have paid $ 370,080 in principal and interest.
GOOD CREDIT – The same loan but with a 7% interest rate (because you have a good credit score – over 700) will give you a monthly payment of $ 655! Your total cost, principal and interest over the life of the loan will be $ 239,400.
A better credit score which results in a lower interest rate just saved you $ 130,680!
As I said earlier, you may just get LAZY, slip up and damage your credit when it could be very easy to prevent. If you know the SIMPLE guidelines to keep good credit intact as well as how to start repairing less than perfect credit you will save TONS of money.
Why not take a few minutes and review some simple guidelines to insure you keep in good standing with your creditors? SEE THE LINK BELOW.
If you're already doing these great, time can only improve your credit score – if not, start changing your financial mindset and your spending habits will follow.