Thrifty Spending Issue 105: Money Saving Tip

Improving Your Credit Score From “Good” to “Excellent” Right Before Making a Big Purchase

If you have good credit and you are planning to purchase a car or home, it  is well worth the wait and effort to raise your credit rating. It should only take a few months to correct your score and it could save you big money.

For instance, on a $200,000 mortgage, someone with a score of 750 might pay $30 more each month versus someone with a 760. While it may not seem like a big deal, it takes a toll: $360 a year and $7,200 during the course of a 20-year mortgage.

“That’s a ton of money, especially considering that you can pretty easily raise your credit score by 10 points before locking down the mortgage rate,” says Gimpel. If you fall just outside the “excellent” credit category, it should only take a few months to correct, so don’t pass up that low-hanging fruit.

And if your credit isn’t so great? “Granted, boosting your score all the way from poor to excellent isn’t a quick fix,” says Gimpel. “When people finally see how ignoring their score has real, everyday costs, it’s usually a head-smacking moment.” It’s still a smart idea to improve your rating before investing in a big-budget item.

Learn what affects your score and how to improve it.