The Simplest Way to Save Money While Improve Your Lifestyle
What is the simplest way to save money while improving your lifestyle? The answer is to improve your FICO® credit score. Improving your credit score will likely cost you nothing but can improve the average households monthly income by $389. That’s $4,668 per year!
Your FICO® credit score is a number between 350 and 850 that banks and lenders use to determine your credit worthiness and thus your interest rates and monthly payments. The number is based on your credit history including your outstanding balances versus your maximum allowable limits. Examine the table below to see how improving your credit score by 100 points can make a huge difference.
|
Monthly Payments * |
With 620 FICO Score |
With 720 FICO Score |
Monthly Payment Savings |
| $300,000 Mortgage |
$1,838 |
$1,581 |
$257 |
| 1st $25,000 Car loan |
$828 |
$762 |
$66 |
| 2nd $25,000 Car loan |
$828 |
$762 |
$66 |
|
|
TOTAL = |
$389 |
* The above numbers come from www.myfico.com on 3/16/2009
The best way to maintain and improve your credit score is to understand how it is calculated and to continually monitor this important score. Here are a few pointers:
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Make your payments on time – this also eliminates late payment fees.
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Minimize the number of new applications you make for new credit as each credit inquires reduces your credit score. Minimize shopping for credit!
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Keep your average length of credit history long. Keep older credit cards active and avoid adding new cards that reduce your average credit history length.
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Don’t make payments by mail as this can lead to a lost or stolen check, and late payments! Make payments more safely online!
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Don’t have too many cards. 15 gas credit cards and 15 store credit cards are ridiculous and too difficult to keep up with. Just have a few major credit cards.
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Keep your balance due low relative to your maximum credit allowed. This can be done by asking your creditor to increase your maximum limit, but you should remember not to use this additional amount.
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Don’t wait to get a statement to pay the credit card. Go online a pay down the balance before a statement is generated. The outstanding balance shown on the monthly paper statement is what gets reported to the credit agency. Reduce this balance before it is reported can dramatically improve your credit score.
These issues are covered more thoroughly in the book Poor No More: Wealth Is Within Reach by Curtis Hill. www.Poor-No-More.com
