Want To Save Money? Improve Your Credit Score!
It’s no secret; everyone wants to save money, and improving your credit score can help you do just that. Saving money while trying to build your credit may seem counter-intuitive, as you have to spend money in order to improve your score. If you are struggling to build your credit, don’t worry. We are here to help.
How Much Could I Save By Improving My Score?
If you think that having good credit is not important, think again. Having good credit can make a vast majority of your vital expenses much cheaper. This includes getting better rates on your car loan, home mortgage, personal loan, or credit card. Your credit score can also help you get lower car insurance premiums. So just how much can improving your credit score save you? Use the below example to see how much less you could pay in interest, and how much you could potentially save as your credit score improves. You will be surprised how much improving your credit score can save you big bucks.
| Loan Amount | Term | Score | APR* | Payment | Total of Payments | Interest Paid | Savings |
|---|---|---|---|---|---|---|---|
| $20,000 | 60 months | 730+ | 2.95% | $359.00 | $21,540.42 | $1,540.42 | $0 |
| $20,000 | 60 months | 680-729 | 3.95% | $367.95 | $22,077.29 | $2,077.29 | $536.87 |
| $20,000 | 60 months | 640-679 | 5.95% | $386.26 | $23,175.78 | $3,175.78 | $1,635.36 |
| $20,000 | 60 months | 600-639 | 11.95% | $444.45 | $26,666.71 | $6,666.71 | $5,126.29 |
| $20,000 | 60 months | 550-599 | 14.95% | $475.33 | $28,519.82 | $8,519.82 | $6,979.40 |
| $20,000 | 60 months | 549 & below | 17.95% | $507.38 | $30,442.60 | $10,442.60 | $8,809.18 |
*The above chart is not a representation of Launch CU loan rates or terms. It is just a general example to show how much you could save on a $20,000 loan as your credit score improves.
From the chart you can see as your credit score improves, you pay less in interest throughout the term of your loan. You also end up saving money in the end. For example, a person with a credit score of 549 could be paying $30,442.60 on a $20,000 loan with a 60 month term, while a person with a 680 credit score could be paying a total of $22,077.29 on the same loan amount with the same terms. That’s $8,365.31 in total savings! To learn about all of the elements that make up your credit score, click here.
How Do I Improve My Score?
- Find a credit card with a low interest rate if you are a balance carrier. A credit card from Launch CU can offer you safety, convenience, great rates, and rewards soon! Best of all, there is no application fee, no annual fee,* and no balance transfer fee.*
- Use your credit card for routine purchases. Use your credit card for gas, groceries, and necessities. This can help you to keep track of your spending, and not incur debt for unnecessary items.
- Sign up for Billpayer. Credit Karma advises that signing up for automatic bill pay at your financial institution can help you manage your finances, while also avoiding late fees and overdraft charges. If you are currently enrolled in Online Banking, you can get set up for BillPayer. With BillPayer you will be able to set up one time or recurring payments from your Launch CU account, set up bill reminders, set up e-bills, view bill history, and more. BillPayer can help you improve your credit score by making sure that you are never late on another payment.
- Make frequent payments. Try to pay off your credit card balance weekly or bi-weekly. This will help you to build your credit faster and prove to lenders that you are a responsible payer.
- Create a spending plan and stick to it. One of the most important things you can do to save money and build your credit is to stick to a spending plan. Use some of our tools and resources to help you create a spending plan that works for you. Creating a spending plan is one of the easiest ways to ensure that you do not overspend on unnecessary or vanity items. You can create a monthly, weekly, or even daily spending plan. The important thing is to find a spending plan that works for you, and stick to it.
Having good credit can help you in many situations in life, including when it comes to employment, insurance premiums, loans, and even renting an apartment. Simply put, your credit score helps many businesses and financial institutions determine if you are reliable. Improving your score helps to lower your risk level, and in turn can save you money in the long-run.
If you have questions regarding your credit score, call us at 321-455-9400 (inside Brevard), or 800-662-5257 (outside Brevard). We would be more than happy to assist you with any questions that you have. Let us help you go beyond!
*APR= Annual Percentage Rate. The rate you will pay will be based on your creditworthiness. If your risk profile puts you in a higher risk category, your rate may be higher. Rates shown are subject to change without notice.
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