| Here's how long it takes to improve your credit score | | |  | WED, SEP 18, 2019 | | | | That three-digit credit score is key to your life because it summarizes your creditworthiness. Basically, the higher your scores, the more likely you are to qualify for loans and credit cards at the most favorable interest terms, which will save you money.
So, here's why you should care. Financial institutions not only use credit reports and scores to decide whether to give you a loan (and at what interest rate), but your credit information is also used for apartment rentals, employment screening and insurance underwriting.
If you care about saving some bucks, you should understand the power of that credit score. Let's take a mortgage, for example. Poor credit scores often lead to higher mortgage rates and increased closing costs, leading to a higher monthly payment.
If you have a low credit score (579 and lower) you will pay as much as 2% higher than the current lowest interest rate. If you have a score of 580-619 you can expect an interest rate as much as 1% higher than the lowest rates available. A score of 620-679 will be slightly affected, with rates around 0.5% higher than someone with great credit will receive. Meanwhile, someone with a score of 740 and higher will be offered the best mortgage interest rates. Keep in mind, the difference between credit scores will add up to big bucks over the life of a loan.
It's obviously important to have a good credit score. If you are looking to improve your scores, be aware it does take time. But the sooner you address the problems that are dragging them down, the faster your credit scores will go up. You can increase your scores by taking several steps, such as establishing a track record of paying bills on time and paying down debt.
For more cool stuff like this, please follow me on Twitter @jimpavia and check out CNBC's Financial Advisor Hub and CNBC + Acorns Invest in You: Ready. Set. Grow. | | Just tell me what the consumer is up to; skip the rest | | "The U.S. consumer is the preeminent economic engine of the world right now, and following things like employment, wages, 401(k) balances, retail spending, small business confidence and home-buying / remodeling trends has been a great shortcut for investors and spectators alike ..." | | | |
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