Whenever we talk about credit ratings, we always make clear how important it is to have good credit for a loan, getting a credit card or buying a car in installments. The naked truth is that just like bad credit can make you ineligible for many things in life, good credit, on the other hand, can actually put pots of money a year, in your pocket.
Remember When You Were At School?
The goody-goodies got all the favor from teachers, they were talked about all the time and they were mentioned as examples until they went red in the face. Nobody talked about the bad guys or the mediocre. They were just left aside like garbage.
Well, something similar happens in real life, you know? Maybe not as "dramatic", but just as painful to the soul as it is to one's material side. Our credit ratings tell everyone else how good or how bad, how reliable and trustworthy we are. And that, I hate to say it, is public domain! Everyone in the whole goddarn country knows who we've paid and who we haven't.
Hey, Let's Play The Good Guy For A Change
Now let's see what it's like to be on the good side of the border. Nobody will go around talking about you if you have good credit. there's no need. It stands out like a sore thumb, that's why! As soon as you step into a bank or a lender to ask for a loan or a line of credit, you start to feel the difference. Your credit report brings a smile on the loan officer's face.
A Typical Case
You need a loan of say, $20,000 for a car. Knowing your credit rating, you will no doubt want to capitalize on it, won't you? So, you'll make it hard for the loan officer to convince you and on the other hand, you will feel safe to negotiate from a better stand point. If you don't get what you want, you go off to another lender and you will continue until you get at least 2 interest points below the first offer.
Do The Math
You start to figure out how much you are saving and, well, 400 bucks is not a bad sum, is it? Now, let us change the example and suppose you want a mortgage loan to move into a new home. The home costs, say, $300,000 just to be on the conservative side. We'll repeat the process but this time we'll put in more realistic numbers.
The normal rate for good credit would be something like 5% to 6%, but let's be conservative, and say 6%. For bad credit, the rates are around 7% to 8%, so that leaves a 1% difference. And I'm being generous on both sides. In real life, on average, the difference could be more like 2 to 2.5 per cent. I just want to show you that the difference of 1% on your loan is. $3,000 per year. Get my point?
And What About All The Other Interest You Pay?
You get credit cards with lower interest, special deals which you only have access to if your credit is good, consumer credit, car loan. and all because your credit rating is good. Have you any idea how you would save on all that if you had good credit? So, if your credit it less than perfect, you'd better start repairing it now. It's still early in the year and you might begin to capitalize on it right away!
