This post was sponsored by Lexington Law
It always amazes me how little importance is given by most people to their credit score. Your credit score determines how much you are going to pay on debt, and between student loans, car loans, mortgages, credit card debt, and so on… that can represent thousands of dollars over the course of your life.
Thousands of hard earned green bills that you wouldn’t have to fork out if you were more careful with your credit. So treat it with care!
Review all aspects of your credit to get your best score
- The first thing you need to do is to check your credit score and your credit report, in order to know exactly where you stand. Don’t go applying for credit cards and other unsecured debts just yet, or you would have to pay a very high interest on that debt. Or, if denied, that would be a hard inquiry on your report, which creditors aren’t too keen on.
- Check out your report carefully, and see if there are any mistakes. Sometimes, they’re pretty easy to spot. A wrong address, a charge you didn’t make, a credit card you did not open,… You can get professional help to address these issues. Lexington Law is one such example. Click here for a Free Credit Consultation – Includes Credit Report Summary & Score
A low credit score can cost you a lot.
Lexington Law did the math for us. A 2.4% interest rate difference on a $250,000 mortgage over the next 30 years can cost you $132,500. Two and a half years of median salary.
That is why, before you start going around and applying for a loan, you should spend a few months getting your credit to the best place possible. Yes, it will take a while. First, cleaning up these errors, then, building up healthy credit habits to get an even stronger score. Allow for four to six months. But would you rather delay the gratification of getting that mortgage, or spend an extra six figures to close on it right this moment?
Better odds of a better rate
When you apply for a loan, there is always that doubt as to whether the lender will grant you the money, and that yes or no decision is made by how you have treated your credit in the past.
If you have defaulted on payments, if your car has been repossessed, if you have maxed out your credit cards, stopped paying your phone bill,… it tells a lender there are chances they might not see their money again. So, to cover themselves, they charge you a higher interest rate.
A credit agency, such as Experian or Equifax, is the institution that will inform your potential lender of past credit behavior. They will report on your history of the past few years. It includes judgements, evictions, but also the mistakes that were made when you were the victim of identity fraud for example.
Some of the instances on your credit report, you may not even know about!
With a credit repair company, you will dig deep into your financial history, bring back your credit to its best possible shape by removing any erroneous entries, and improve your chances of getting approved for that new line of credit you are after.
Not interested in getting credit just now? Then it is the best moment to fix your credit score. Since it takes a while to repair your credit, you don’t want to wait until you need it. Act now!