There are many ways in life to save money however many of us do not think about our credit score being able to save money on a daily basis.
Bad Credit vs. Good Credit
One of the first items a potential lender will look at is what the borrower’s credit score is. It does not matter if the borrower is applying for a traditional loan or a credit card. The credit score will make all the difference.
If the borrower’s credit score is in the poor to bad range the lender will see that person as a high-risk borrower. This means that the loan amount or credit amount will typically be lower. The borrower will also get stuck with a very high interest rate. The lender will charge the high interest rate to protect themselves against losing money. Often times if the borrower’s credit is in the very low range the lender will ask for collateral to secure the loan. If the person does not have any collateral to put towards the loan as security the lender will possibly deny the loan.
It will be just the opposite if the borrower’s credit is good to excellent. Lenders like to see a good credit score. This means that the borrower is responsible with their money and pays their bills on time. What this means to the borrowers is that the interest rate will be low and will save them hundreds if not thousands of dollars through out the life of the loan. It will also give them the option of borrowing a larger amount of money than it would if the credit score was low.
How To Keep A Good Credit Score
There are many tips to keeping your credit score good. The first of these tips is to keep the balances on your credit cards low. Do not overspend. If the balances become too high the credit score will typically drop. This usually happens if the balances on the cards are over fifty percent of the credit limit.
A second tip is an obvious one. Paying your bills on time every month will help to show that you are a responsible borrower. If there are late payments on your account this will be reflected in the credit score.
A third tip is to check your credit reports for any incorrect information. Many times a person will have mistakes on their credit report that is driving the credit score down. By obtaining a credit report and having any mistakes fixed as soon as possible you will find that your credit score will improve.
Everyone is looking to save money. If you fall into this category you should take care of your credit score. By keeping your credit good you will find that lenders and credit cards companies will look highly at you and you will be rewarded with a low interest rate and fees. This can help you to save thousands of dollars every year.
Janice likes to write informative articles. She generally covers financial issues like credit card, debt, loans for bad credit, mortgage, insurance etc.