How Raising Your Credit Score Can Make You $22,263 Over a Lifetime
Improving or repairing a bad credit score is something of a financial necessity in how it can facilitate life so much in your everyday life, such as your ability to take loans, and the rates you will receive. Additionally, it even make you money.
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Recently, a new LendingTree study found that raising credit score from fair (580 to 669) to very good (740 to 799) can also help you earn an extra $22,263 over a lifetime. The study also noted that this sum breaks down to a monthly savings of $92, a not-negligeable sum given the current uncertain economic landscape..
“Improving your credit score has the largest impact on your mortgage costs. Boosting your credit score from fair to very good could result in $16,677 in mortgage savings, accounting for 75% of the total savings,” LendingTree noted.
In addition, the improvd credit rating can net you $3,548 in credit credit card savings, $1,485, or for personal loans and $553 for an auto loan, adding to $22,263 in total.
It’s worth noting, however, that the potential savings of $22,263 is down significantly from $49,472 in 2022, with mortgage savings decreasing the most. Yet, these savings are still notable.
Tips To Improve Your Credit Score
One simple, though not always feasible, way to boost your score is to simply pay your bills on time.
“One missed payment will completely wreck your credit score,” said Jeff Rose, CFP, founder, GoodFinancialCents.com. “It’s the 21st century so there’s no reason to miss any payment. Period.”
Rose suggested setting reminders or automating your payments to never miss a due date. “This consistency shows lenders you’re reliable, potentially leading to better credit offers.”
Another suggestion is to become an authorized user, some experts said.
“If someone with a long history of responsible credit use adds you as an authorized user on their credit card, their account history can be appended to yours,” said Peter Earle, senior economist, American Institute for Economic Research. “Needless to say, this method requires trust and cooperation from the account holder.”
You can also in some instances improve your credit score by requesting credit limit increases from your credit cards. By doing so, you reduce your credit utilization percentage and that is a key component of your credit score, explained Jim Wang, founder, Wallet Hacks.
“When you do this, make sure you only ask for a modest increase so it doesn’t potentially involve a manual review or a hard inquiry on your credit report,” added Wang.
Finally, you can also boost your score by correcting errors on your credit reports.
Earle suggested reviewing your credit in reports from the three major credit bureaus (Equifax, Experian and TransUnion) for inaccuracies such as incorrect balances or accounts that don’t belong to you.
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“Disputing and correcting these errors can lead to a notable increase in your credit score,” added Earle.
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This article originally appeared on GOBankingRates.com: How Raising Your Credit Score Can Make You $22,263 Over a Lifetime
