It is more expensive to borrow money in 2024 and more expensive to carry debt. American consumers have now amassed over $1 trillion in credit card debt, and the average household is carrying over $6,000 in credit card debt. With credit card interest rates being as high as 20%, if your credit is not the best, it is costing you more money to use credit and carry debt.
But let’s take it a step further: If you would like to buy a home, mortgage rates are currently at the highest they have been in over 20 years, so in addition to saving for the down payment, buying a home now can be exorbitantly expensive. In fact, your mortgage payment could be significantly higher for the next 30 years.
This is why your credit is more important than ever, because your credit score can determine if you get the best mortgage rate or better credit card offers. Your credit can even be pulled for health insurance, apartment applications, and employment.
According to most banks and credit bureaus, “good” credit is considered a credit score of 670 or higher. The higher your score, the more likely you will be able to get the least expensive loan and credit card offers. In the world of home-buying as it currently stands, having a score over 700 may be the only way to secure the lowest available interest rates.
So what can you do to improve your credit? What should you do if you are stuck in the 640s, 620s, or lower?
Here are a few tips that can help you raise your credit score:
1. Pay on time — every time.
On-time payments account for 35% of your score, so paying your bills on time is vital. Your payment history shows potential lenders whether you make payments on time, if you miss payments, or if any of your accounts are past due.
Credit bureaus, lenders and even potential landlords consider your payment history to be your financial report card, showing how consistently you pay your bills. It’s best to have a 100% on-time payment history so…
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