Has your credit been damaged by prior emergencies or bad habits? As you get on a better financial track, it's a good idea to work to improve that credit score as part of your overall financial plan. Why? Here are three key ways credit repair boosts your financial plan no matter where you are in life.
1. Reduced Interest Rates
One of the most common impacts of poor credit is that you no longer qualify for the best interest rates on loans, credit cards, and home equity lines of credit. A few percentage points of interest can mean a difference of hundreds or thousands of dollars spent over the course of a loan.
As your credit score rises, you will start to qualify for better rates from the beginning. This offers the chance to refinance existing loans for lower rates, and it means future credit will be less expensive. For financial planning purposes, less expensive borrowing allows you to put more money toward debt payoff. You might even eventually leverage, or use borrowed money for an investment, due to low interest rates.
2. More Credit Options
Along with limiting you to higher interest rates, bad credit limits which loans you can even access. That means you have less choice in loan providers, less generous loan terms to choose from, and less ability to take advantage of rewards programs.
Even if you don't plan to borrow now, keeping your options open gives you more options when that changes. If you come across the right real estate investment property, for instance, you can jump on it because your credit will already be in a good position. Remember that financial planning is a long-term project.
3. Emergency Preparedness
A big part of financial planning is preparing for the possibility of a financial emergency before it happens. Could you access inexpensive credit if your roof sprung a leak, you were in a car accident, or you were laid off from your job?
When these emergencies occur, it's vital to spend the least amount possible to borrow money until times get better. This means low interest installment loans, inexpensive home equity lines of credit at the ready, and low or zero-interest credit cards. Secure these options now so you can tap them if things take a sudden turn.
Where to Start
Boost your financial plan now by giving attention to fixing your credit. This often takes some time, so start now so you can see results when you need them. Call or visit a credit repair specialist in your area today to learn more.