The difference between bad credit and great credit can mean the difference of ten of thousands of dollars in your pocket. Our recent article, What Is Your Credit Score?, discusses how your credit score is determined and here we will discuss why this number is so crucial.
Your credit score will dictate your rate and terms on everything from mortgages, personal loans, credit cards, and even costs for auto and home insurance. Great credit is something that we should all strive to achieve and maintain. It is not simply about the score itself, but what the score means and the money it will potentially save you.
In many cases, our homes will be the largest purchase we ever make and we will not pay cash and we will need a mortgage. Purchasing a home with a $500,000 thirty-year mortgage at 5.5% will cost the borrower $1,022,020 over the lifetime of the loan. Assuming that same borrower, because of their great credit, was able to obtain the same loan and get a mortgage at 4.5% (one percent lower), they would pay $912,034 over the life of the loan and experience a savings of just under $110,000. This is real money that could be used to save for retirement, your child’s education or even traveling to places you have always wanted to visit.
The home purchase example is simply one instance where this type of savings can be realized. Having great credit can also lead to savings on auto loans, personal loans, more favorable credit card rates, homeowners, and auto insurance too. When you add up all of the areas of your life where credit is used these savings can add up to significant dollars that can have a positive impact in other areas of your financial life.
Credit is a financial tool that needs to be utilized properly and monitored regularly. Losing points on your credit score could mean the difference in obtaining a good or great rate. Be sure to check your credit score annually, everyone is entitled to a free credit report every year. Contact the credit bureaus regarding anything that does not seem correct and be sure to dispute it if needed. Your credit is an opportunity to save you real money and should be monitored to ensure you have the highest score you can.
We would be happy to discuss your credit score with you and why it is important to strive for the highest score you can achieve. Just contact us, Mitlin Financial, at (844) 4-MITLIN x112 to schedule a time to discuss. Be sure to share this article with friends, family, and business acquaintances who might be interested too. We look forward to helping you, and them, get on the right path and stay there.
This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. To determine what may be appropriate for you, consult your financial advisor.