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- I’m currently renting a house – whether I continue to rent or decide to buy, my credit score will be helpful.
- Maintaining a high credit score will also help if you take out a small business loan as an entrepreneur.
- My credit score can also help me get the best rates on car loans and insurance in the future.
One of my biggest year-end goals is to audit my finances. I can’t wait to recognize the mistakes I’ve made in 2023 and I want to find opportunities that I can take advantage of as the new year begins. As I looked through my bank statements and portfolio, I noticed that my credit score was at an all-time high.
After years of being in what was considered a “good” range of 670-739, I have reached the “very good” 740-799. I attribute this to paying off my credit card on time and trying to reduce my credit utilization.
I decided to ask a certified financial planner Patryk Marcinko for ideas on how I could use my high credit score to help achieve my future financial goals. This is what he recommended to me.
1. Be a competitive buyer if I decide to buy a house
Rent prices are skyrocketing in my area and my partner and I have been considering buying a house. Marcinko says that with my high credit score, I may qualify for a lower mortgage payment.
“With a high credit score, lenders are more likely to offer you a better deal on mortgage rates. With interest rates rising to their highest levels in over a decade, any rate reduction could save you potentially thousands of dollars over the life of your mortgage,” he says.
What’s more, since the properties I was interested in had already received multiple offers, Marcinko says a high credit score could come in handy in the new year when I start looking again.
“Lenders will be more likely to approve your application with a good credit score, which will make you a more competitive buyer,” he says.
And if I decide to continue renting, he says landlords often check credit scores to qualify tenants.
“A high credit score can help you get approved for an apartment quickly, which could be the difference between putting it at the top of your list,” he said.
2. Get a small business loan for a new idea I have
I have been an entrepreneur for nine years and I have a new business idea that will require capital. Since I don’t want to go through the process of acquiring investors and giving up capital, Marcinko recommends considering another route and obtaining a small business loan.
I can ask my bank for a line of credit or a term loan. However, as part of the application, they not only want to see revenue and gross sales, but they will also look at some of my personal finances, including my credit score.
“When a bank is considering whether to approve a business loan, they will ask to check your personal credit history,” he says. “A good credit score will make it easier to secure money for your business.”
3. Buy a car for the first time
As a new parent living in the city, getting around with a baby wasn’t easy. I decided to consider buying a car for the first time. While looking, I was nervous about the price of the car and the cost of insurance.
Marcinko says insurance companies look at your driving and accident history, but they also look at your credit score when setting your monthly premiums.
“A high credit score can lead to potential discounts and reduced premiums on car and home insurance. Other than that, everything being equal, usually someone with a higher credit score will pay less,” he says.
Since I don’t have the funds to buy a car in cash, I will have to take out a car loan. Marcinko says that, as with mortgage rates, a good credit score can help you get a better interest rate.
“A high credit score can also help you get approved for an auto loan at the dealership, so you can buy the car you’ve been looking for right away,” he says.
How can I keep my credit score high?
Since it took me a long time to achieve such a high result, I asked Marcinko how I could maintain it in the new year.
He suggests that I continue many of the actions I’ve taken this year, such as not neglecting my monthly payments, keeping my credit utilization low, and refraining from closing old credit cards, as this may reduce the average age of my credit history.
Additionally, Marcinko says that by having a high credit score, I can have access to privileges and benefits that credit card companies reserve for people with strong credit.
“Be sure to pull your credit report at least once a year,” he says. “When pulling out a report, not only check the result, but make sure all the information in it is accurate. Mistakes happen, and you want to have as accurate a credit history as possible.”
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