Three Little Numbers, Huge Impact
Your credit score may just contain three digits, however it hugely impacts your credit score and purchasing power. Those three little numbers can determine whether or not you buy your dream house, car or if you’re even able to apply for a new credit card. Think of your credit score as your financial history in a nutshell; a number anywhere between 350 and 850. Typically, anyone with a score over 760 is considered someone with very good credit and the best (meaning lowest) interest rates.
Your Credit Score Is Transferable
Your Miami accountants know that as mortgage lenders such as banks check your credit score in order to determine how much of a risk you are. They want to ensure they’ll get their money back, plus interest, for lending you the funds to purchase a home. Thankfully, should you move from one state to another, your credit score is transferable so if you’ve handled your debts properly you’ll have instant credibility even in a city you have no past in. Of course, your Miami accountants remind you that a transferable credit score can also work against you.
Low Credit Score Means Low Credit Limit
If your credit score is low due to mismanaging your money, you can expect lower credit limits. A credit cards company can give you limits as low as $500 or $2000. So if you’re looking to spend big bucks for a vacation or even paying off other debts, know that your purchasing power can’t afford that.
Increased Interest Rates
Your Miami accountants remind you that your credit score impacts how much interest you’re paying on a loan, especially when it comes to the monthly installments. The purchasing power is even greater on big ticket items such as your dream house. A good credit score versus a bad credit score can be the difference between paying 4% interest versus 9% interest, meaning a $500 or $600 increase in payment every month. This is if your credit score is good enough to get a loan in the first place. The alternative is to be completely denied, meaning not get a loan at all because no lender wants to take a risk.
Positively Impact Your Purchasing Power
Make sure to keep paying your top loans on time, including car, student loans and mortgage should you have any of these. Your Miami accountants remind you that those are the most common loans found on credit reports. Late payments will affect your credit score in a negative way and possibly even prevent you from getting new ones. Remember liens and judgments also influence your purchasing power; they can be harmful to your credit score. But if they’re paid on time, they most likely won’t even appear on a credit report.
Should you need more help on getting a better credit score to increase your purchasing power, reach out to Miami accountants at 305.868.7620.