With inflation ending February 2023 at 6.04%, down from its peak of 9.06% in June 2022, consumers and business owners alike are still facing uncertainty when it comes to figuring out future costs.
High inflation rates can coordinate with high interest rates – which weighs heavily on the economy overall. I’ve had friends ask if they were to get a personal loan, could they use it as a downpayment on a new home - the answer is no. However, that doesn't prevent anyone from applying for a personal loan to consolidate debt to create a lower monthly interest rate or use the funds to make a home improvement before selling their home, among other items.
There’s a lot of variables that go into the process of who a lender loans money out to for any type of loan – one of the main factors, your credit score. This is why it’s so important to know how to get, and keep, a good credit score. Your score reflects your credit history and tells lenders things like have you consistently paid your balances? Do you have an established credit profile? Do you have many forms of credit?
Six Tips to Help Keep Your Credit Score Solid:
- DO keep your credit card balances from running too high. Large amounts of outstanding debt can harm your score.
- DO set up payment reminders via email or text. A history of on-time payments is a surefire way to improve.
- DO target debts with the highest rates and the highest balances. Come up with a payment plan that fits your financial situation and takes aim at high-interest and high-balance debts to build your score.
- DON’T move debt around. Shifting funds is not a solution. Pay it off as soon as possible.
- DON’T open credit cards unless you need them. You could put your score in jeopardy.
- DON’T close credit cards you haven’t used to give your score a quick boost. Closing cards can have the opposite impact and lower your score.
For more insight, the three credit bureaus—TransUnion, Experian, and Equifax—calculate your credit score using a variety of elements that predict how likely you are to pay back a loan or other credit obligations in a timely fashion. However, your credit score does not determine whether you're approved for credit or what interest rate is assigned - that is all up to the lender. But it does help the lender make that credit granting decision, according to myFico.com.
In good health,
Daniel Henry
All information provided in this article is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction.