Simple way to lower interest rate on home, car payments
You credit score affects the interest rate you pay on everything from your car to your mortgage.
Want to lower those rates? There is one simple way to do it; raise your credit score.
The score ranges from 300 to 850.
We talked with certified accountant Amy Welsh to find out what we need to do.
1. Why is it important?
Lenders use it to determine how much of a credit risk you will be for them.
Their decision has an impact not only on whether they will offer you credit but also how high an interest rate they will charge.
2. What is the difference between a score of 620 and 760?
A 30-year, $200,000 mortgage and you had a credit score of 760 or higher.
That score could earn you an interest rate of 4.096 percent and a monthly payment of $966.
If your credit score was only 620, however, you could be charged 5.698 percent, for a monthly mortgage bill of $1,161 to $2,340 or more per year.
3. Do we need to check our credit score? If so, how often?
Checking your score every four months is a good idea because you can catch possible errors and identity theft.
You can request a report from an agency every four months.
4. What is the single most important thing to do to help your credit?
Pay your bills on time.
Missed or late payments will lower your credit score but you can repair the damage by getting back on track and making timely and regular payments.
Want to learn more?