Every year is a year for crushing goals! We’re calling it now and reminding you when you forget. Whether you’re quitting smoking, sticking to a diet, or you’re determined to buy a new home this year, it’s the small decisions that lead to big goals.
One thing you can work on that will pay off BIG is your credit score. Every day people are throwing away money over their credit score. I’ve been house shopping for a while now and being the nerd I am, I have done a lot of research. We all know having a better score will help us get approved for a loan, but we sometimes don’t consider how much interest costs us.
Here’s an example I found on a business site:
For example, consider a mortgage loan for $300,000 with a fixed interest rate of 4.5 percent and 30-year terms. Over the life of your loan, you’ll pay a total of $547,220 (or $247,220 in interest). Monthly payments on this loan would be about $1,520.
If you get the same loan at 3.5 percent, your investment cost over 30 years will be $484,968 ($184,968 in interest). Monthly payments on this loan would be about $1,347.
In this example, a 1 percent difference in interest rate could save (or cost) you $173 per month or $62,252 over the life of your loan.
(Note: The above example only considers fixed-rate loans. If you have an adjustable-rate mortgage, your total costs would differ depending on shifting interest rates.)
Houses are a big purchase, and you can see how much money you can save just by having a better interest rate.
Now let’s consider cars:
->they depreciate quickly
->the interest rates can be into the 20% range
->those with worse credit can have significantly more left on their current loan when applying for a new car loan, meaning that will be rolled into your next loan. For example, if you owe $5,000 on your current vehicle, and because of depreciation, it now has a trade-in value of $3,000, which means $2,000 has to be added to the loan on your new car purchase; add to that a high-interest rate & you’re again paying more for that vehicle. Over the course of a few vehicles, you can be buried.
Banks use our credit scores to consider the risk they take by giving us a loan. This means having a better credit score will get you a better interest rate & which will save you even more money to build your credit.
Here’s a video that one of our favorite sales guys did that breaks it down for you.
I gotta throw this out there, James was voted the Best of the Best Salesperson of the year for 2020 & 2021, and he’s been promoted to finance manager! He’s a good man, and we’re proud to have him on our team.
Here are 6 things you can do now to improve your credit:
- Sign up for credit karma. **I can’t emphasize this enough –>>Ignore your actual score on there. It’s really terrible at giving you a correct score. However, it gives you an excellent overview of where you stand with creditors.
- Make sure you’re paying everything on time.
- Only use credit to build your score. Maxed out credit cards are terrible for your credit.
- Don’t just make the monthly minimum payment. If your bill is due on the 15th, make the minimum payment on the first & an additional amount on the 10th.
- Dispute incorrect information; this is where Credit Karma comes in really handy because they help navigate you through the dispute process and make it quick & easy. Disputing something negative on your credit report doesn’t always get it removed, but it’s totally worth the try.
For example, I had a medical bill that was paid, but it showed up as delinquent on my credit report, I followed the process (like 5 min tops), and it was removed within a month or so. I also recently had a late payment, only reason being the site was down to pay my bill & I’m paperless, so I didn’t have my account # to call in and pay. When they finally mailed me something, I called and paid the same day. Even though their site was down & my payments had been on time for years, it still showed as a late payment on my credit report. I disputed it & didn’t win that one. So you win some, you lose some, but as long as you’re conscious and intentional, you can bring up your score. - Use your credit wisely. Take some time to learn how it works & then work it!
Tip: You can actually find some good financial & credit repair advice on TikTok if you look for it.
It’s kind of like a diet; they don’t really work unless you make a change in your lifestyle. Being conscience & intentional with your credit is a lifestyle change. It’s a change that can seem overwhelming if you feel buried, but imagine how you’ll feel once your credit is under control and you’re saving money on interest & learning to use your credit more wisely. You can reward yourself with a nice vacation, you’ll be able to afford it. 🙂
Here are a few links to help you kick off your journey:
How to Improve Your Credit Score (Experian): http://bit.ly/2Xt3vmT
How to Dispute Credit Information (Experian): http://bit.ly/38yr186
I hope this information has helped & if you have any questions, please feel free to ask. If I don’t know the answer, I’ll do my best to point you in the right direction.
If you have a subject you’d like to tackle, let me know here or by email (cathyn@harryrobinson.com) or via messenger.
Be Blessed,
–Cathy
