There is a good chance that when you think of ways to boost your savings, increasing your credit score does not immediately jump to mind. Oddly enough, when it comes to building your wealth, having a good credit score is actually one of the best things that you can do.
A FICO score can seriously alter the amount of extra money you have. In fact, there have been studies that show that a low score can cost a family home nearly $10,000 during working years. This is because a good credit score can affect everything from interest rates, loans, mortgages, and even credit card payments. The idea here being that as your credit score rises, the interest rate on new loans should go down.
When it comes to mortgages, a good credit score can help families save the most amount of money. Because of the nature of mortgages, they are typically very sensitive to even the smallest changes of interest rates. This means that a good score can qualify a home buyer to get a much better interest rate and subsequent lower monthly payments. In this way, a home buyer with a good credit score can save nearly $83,770 over the lifetime of a 30-year mortgage of 250,000.
Credit Card Rates
Your credit score affects your credit cards in numerous ways. A bad credit score can really cost you when it comes to credit cards in the way of higher interest rates. There are cards that offer much better rates for those with good credit – when compared to those with poor credit. The difference between the higher rates and the lower rates can equate to about $1,200 in additional payments every year.