Many people do not realize the impact of having a low credit score. But over a lifetime, the costs can be extreme. In fact, it could be the difference in retiring early or not at all.
Here are three steps you can apply immediately to improve your credit score and financial future. The benefits of these actions are cumulative over time. So don?t expect to see a hundred point change in six months. But when the strategy is applied over thirty years, the results can be nothing short of amazing.
Three Easy Steps
Pay off all debts early. Many people are in the habit of maintaining revolving balances. Rather than paying off their credit cards they make minimum payments. They think of it like a home or car payment. The problem is that the principle decreases slowly. So a great deal of money is paid in interest. And your credit score will drop as well.
Never miss a payment. Late payments can occur for a variety of reasons. Sometimes it is forgetfulness. But it also can be due to not having necessary funds when they are needed. This will negatively impact your credit score over time.
Invest some of what you save in interest on retirement.When we are younger, we give little thought to retirement. Most of the focus is on enjoying the here and now. But this will catch up over time. And as you get older you begin to think a great deal about retirement.
You may be wondering why these action steps are so critical. A credit score looks at a number of different factors in the computation. Two important ingredients in that analysis are revolving debt and payment history. If debt on credit cards accumulates over time, it has an adverse effect on the credit score. The same is true for late payments.
Imagine that you are someone who loans other people money. How would you evaluate a person who continues to accumulate debt? What would you think if a person were habitually late on their payments?
For discussion sake, let us assume you compare this person to another individual. In that comparison the other person pays off their debts and always pays on time. Who would you look at more favorably?
Any wise person would be more willing to loan money to those who pay on time and do not have much accumulated debt. This is exactly what happens when your credit score is calculated. And you are rated on these factors.
Now the smart money manager will invest a portion of the saved money for retirement. The unwise person is unable to pay down the debt quickly because of high interest rates. And though this approach does not reap immediate results, it pays huge dividends over a lifetime.
Would you like some practical help with rebuilding credit? Then stop by http://rebuildingcreditsystem.com/ ?to learn what you can do to improve your financial future.
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Source: http://kiss101.net/improving-your-credit-score-and-financial-future/
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