Ways that Good Credit Saves You Money

With a good credit score comes great responsibility—and also great rewards and perks!

If you have a higher score, you will probably find yourself saving money in ways that you may not have even realized possible. For instance, you’re eligible for top credit cards, which always means way more perks and benefits. On top of that, you’re also able to get lower APR rates for your cards and for loans. Often you’re judged on interest rates based on how much of a credit risk you pose, so if you’re credit is secure you’re able to enjoy lower rates.

On top of that, a better score also affords you cheaper phone plans as well as better opportunities for car insurance. Essentially whenever you’re trying to make a big purchase in your life, a good credit score will not fail you.

Image via Credit.com.

Credit Score Myths You’ll Want to Ignore

There are plenty of myths floating around out there about credit scores, but sometimes believing certain ones can actually hurt you rather than help you. Here are a few myths that, if you hear them, you’ll want to let them in one ear and out the other.

  1. Checking your own score will hurt your score. This is only true if you get a hard inquiry into your credit (which is when you apply for new credit). However, soft inquiries into your credit score won’t negatively affect you and won’t be visible to companies checking your score.
  2. Credit card debt is a bad thing. The only time that credit card debt is bad is when it’s too much debt (especially if you’ve maxed out a credit card). Having small amounts of credit card debt will actually help your credit score instead.
  3. Closing old accounts helps improve your score. Although it seems like a good thing to close out old accounts you aren’t using anymore, this could actually negatively impact your score. Closing them reduces your available credit and will throw off the age of your oldest account. Cut up those old cards and keep those accounts around!

Image via The New York Times.

Things that Don’t Negatively Impact Your Credit Score

Sometimes it feels like almost everything can have a negative impact on your credit score. Here are a few things that won’t hurt your score.

  1. How much money you make from your job.
  2. The amount of money you keep in the bank.
  3. Debit cards.
  4. Late fees–to an extent. You have until 30 days after the payment is due, so as long as you pay within that timeframe, you won’t get anything other than some late fees from your lender.

Image via I Will Teach You to Be Rich.

Nearly Half Of Millennials Feel Held Back By Their Credit Scores

It seems many millennials are facing an uphill battle with bad credit, and a recent survey has illuminated just how large a problem it is. More than a quarter say their credit score has cost them a home, a loan or a line of credit, and many others cannot purchase a car due to credit concerns. Read on for more survey results.

Image via Flickr/Nick Sherwood

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How Length Of Credit History Affects Your Score

The amount of time you’ve had credit makes a difference in your credit score. In fact, after payment history and amounts owed, length of credit history is the most influential part of your FICO score.

Length of credit history means…

Age of your oldest credit account

Age of your newest credit account

Average age of all your accounts

How long various credit accounts have been opened, such as mortgages, credit cards and auto loans.

Length of time since different types of credit accounts have been used.

Keep the length of your credit history in mind the next time you check your credit score. The longer you can prove your history, the better the it looks towards your credit score.

Benefits of Keeping a Clean Credit History

Keeping a clean credit history makes life a whole lot easier. Whether you’re trying to get a car, apartment, job or loan sooner or later someone will use your credit history to judge you. But let’s focus on how your credit score can affect your ability to get a loan. Getting a loan such as a mortgage or installment loan are the most popular reasons for improving and maintaining good credit.

With poor credit your chances of getting approved are slim and if you do manage to get approved, you will have to pay back astronomical interest rates. Other drawbacks of trying to get a loan with shaky credit include:

Needing a cosigner

Putting up collateral

Having to jump through these extra hoops can be stressful and even embarrassing (especially if you need a cosigner). You may also have do a little more to get the loan, such as find a cosigner or put up collateral. Your best bet is to start now working on cleaning up your credit.