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How Strong is Your Credit?
May 1, 2017
Credit scores usually range between 300-850. A credit score of 700 or above is generally considered good. A score of 800 or above is considered to be excellent. Most credit scores fall between 600 and 750.
Many people do not realize the importance of maintaining a strong credit score in order to gain financial stability. The higher your credit, the lower your interest rate. The lower your interest rate, the further your dollar will go. For example, with a FICO score ranging from 760-850 you could obtain a 30-year fixed home mortgage APR of 3.728% with a 20% down payment. Your mortgage payment would be $2,309 per month and total interest paid would total $331,363. If you had a FICO score ranging from 620-639, you could obtain a 30-year fixed home mortgage APR of 5.317% with a 20% down payment. Your mortgage payment would be $2,782 per month and total interest paid would total $501,449. That is a $473 monthly savings and $170,086 over 30 years just for having a better credit score!
How can you obtain excellent credit?
#1 Pay your bills on time.
#2 Eliminate credit card balances.
#3 Keep old accounts open and do not use them!
#4 Keep your total credit card utilization under 9% of your total credit card limit available.
#5 Do not use more than 50% of the credit limit on any one particular credit card.
#6 Make consistent payments.
#7 Do not apply for multiple lines of credit within 30 days.
What things that lower your credit score?
#1 Accounts going to collections.
#2 Missing or late payments.
#3 Using more than ⅓ of your available credit.
#4 Closing multiple accounts at the same time.
Keep in mind that your credit is important to your financial future. Not only will a strong credit score will enable you to receive a lower interest rate, but it is also important to buy a home or a new car. Some companies check credit before hiring potential employees. A negative credit report could prevent you from being hired. If you are thinking about starting your own business, you could be denied a business loan based off of your personal credit history.
Loans and credit are a necessary part of life for most Americans. An excellent credit score and a strong credit history are critical factors is maintaining financial stability for your future. If you do not have an excellent credit score, start to pay down and/or off creditors, make your payments on time, and keep accounts that are paid off open without using them. You will begin to see your credit improve and your interest rates go down!