|
About Us |
Contact Us |
FAQ |
Articles
Improved Credit Allows for Lower Interest Rates
Your credit score dictates the types of interest rates that
you can obtain whenever you apply for credit. That credit score
is an indicator of how likely you are to repay your debt.
Improving that score can help you qualify for lower interest
rates on credit cards and other types of credit.
Why Does Credit Score Determine Interest Rate?
Your credit score represents your compliance with creditor
terms over the past ten years. It reflects your ability to
handle consumer credit and manage your debt responsibly.
A poor credit score indicates previous financial problems,
which is generally perceived as a higher risk of default in the
near future. Creditors demand a higher interest rate to offset
that higher risk. Otherwise, they would not be willing to extend
credit to those with poor credit.
When you apply for credit with a poor credit score, lenders
will scrutinize negative items on your credit report and may
deny your application altogether. If you are approved, they will
demand a higher interest rate. Even credit cards will carry
higher interest rates.
How Does Credit Counseling Improve Credit?
Credit counseling can show you how to budget and save so that
you are less reliant on credit cards to get by each month. This
can help you free up additional cash to pay your bills. A
debt management plan can
even lower your payments, thereby freeing up more income each
month. Debt management plans can actually
lower
interest rates on your existing credit card debt balances.
If you need and qualify for a debt management plan, then you
can get an edge on reducing your debt balances.
Eliminating credit card
debt can help improve your credit score. High debt balances
can reduce your credit score if you do not show progress in
paying them off. A debt management plan also helps you
establish and maintain a current payment history. This is the
most important factor in calculating your credit score. Your
excellent repayment history through credit counseling can earn
you a much higher credit score, which will in turn provide for
lower interest rates on future credit accounts. To begin paying
off debt and improving your credit score,
contact a credit counselor to learn how you can obtain lower
interest rates and an improved credit score. |
