#2  Increase Your Credit Score to Decrease Your Interest Rate

Source: http://www.ccacredit.comA credit score is a lenders snapshot of your credit history.  By looking at this one number a lender can very quickly determine how much of a risk they are facing when they lend money to an individual.  People with high credit scores are rewarded with low interest rate on their loans and low credit scores means paying higher interest rates.  The difference between a low interest rate and a high interest rate is hundreds of dollars every month on a large loan…such as a mortgage.

Since your credit score is based off of your credit history, you can bring up your score by following these tips:

> Tip # 1 Bills – Make all payments for your bills ON TIME. Late payments (payments that are 30 days late or more) have a negative effect on your credit rating.

> Tip # 2 Credit Cards - If your credit is in need of repair don’t cut up your credit cards.  If your credit is bad, you may not be able to gain additional credit cards later.  A great way to re-establish your credit is to get a secured credit card. You will have to keep a designated amount of money in an account that will be sufficient to cover your charges, and make payments on time.

> Tip # 3 Limits - Keep the charges on your credit cards way below their limits.  Lenders look at how close your spending is to your account limits.  If you keep your credit cards close to the maximum limit it shows the lender that you are over-leveraged.  It is best to keep your charges on your credit cards below 33% of their limit.

> Tip # 4 Bankruptcy and Tax Liens - Avoid bankruptcies, collections, and tax liens.  These can last for about 7 to 10 years on your credit report.

> Tip # 5 Check it! - Get a free yearly copy of your credit report to keep tabs on your progress and to catch any errors.  You can get a copy of your credit report free at www.annualcreditreport.com

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