19th June 2016
Your credit score is probably one of the most important figures in your life. Your credit score determines your eligibility to borrow money, be it a traditional credit card, car financing, or a home. It also determines the interest rate you will be charged. The lower the score, the higher your interest rate will be, and vice versa. But how often should you check your score? Experts agree that you should check your score annually. However, if you have a low score and want to improve it, you should check it monthly. One myth about credit scores is that checking it too often can negatively affect the score. This is only true if you do so through an actual credit application. You can check your score using sites with many credit report companies as often as you would like without any penalties. There are several reasons why you need to keep a close eye on your score.
With ever growing threats against cyber security, it is vital that you protect yourself from identity theft. If a criminal steals your identity, they can apply for credit cards in your name and run up as much debt as possible without paying, leaving you in default of payments. If you check your score and find unrecognizable accounts that you suspect may be fraudulent, you will need to report it to police and get an incident number. For more help on stolen identities, click here.
Your home is the most expensive asset you will ever purchase and lenders will put you through the ringer before they agree to a mortgage offer. If you intend on buying soon, check you score and start taking steps to improve the score if possible. Again, the higher your score the better your interest rate will be. This is the same if you are looking to refinance as a good credit score could bring your interest down by 1%. We advise that you start this process 3-6 months prior to a mortgage or refinance application.
If you need to finance a vehicle, your credit score will contribute to the interest rate. However, the size of your down payment will also be factored into the lending agreement. Car loan interest rates typically range between 5-10%. You may sometimes be offered 0% finance and £0 money down. Be wary of these offers as often times the vehicle price is increased during these promotions. (How else would the dealer make money?) Also, the 0% is only for a limited time and making the minimum payments won’t usually pay off the vehicle in full before the term ends.
This one you might not have expected but it’s absolutely necessary. It’s common knowledge that the number one argument among couples is usually about money. Once you are married, your finances are joined, at least in the eyes of the law. It’s important to get on the same page with your partner about money so both parties should check their scores and work together to make improvements if necessary.