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Pensacola Real Estate News: Your Credit Score – The Key to Building Your Future Wealth

It seems today as if everyone wants to know your credit score. Lower credit scores cost you in more ways than you may be aware, not just failure to be approved for a real estate home loan. It can all add up to big savings or losses for you, depending on how responsible you are with your credit.

I will show you how low credit scores hurt your chances of building long term wealth. And everyone knows real estate is a key factor in building long term wealth.

As a real estate agent in Pensacola Florida, credit scores are extremely important to me. Helping my Pensacola home buyers get the highest possible credit score makes the home buying process much easier for my clients. If your credit score is not where it needs to be, the time to start building your credit score up is NOW!

Having a higher credit score is critical to building your wealth. To build wealth, you need to keep your money instead of paying it out and receiving no real value in return. Read on to find out how your future wealth is directly related to your credit score. (It is also directly related to your outlook on life, but that is a whole different series of articles yet to be published).

Who cares about your credit scores? Just about any entity that wants your money.

1. Lenders – If you want to borrow money for any reason, lower credit scores will mean higher interest rates. It also makes for a more complicated loan approval process. The lender will ask you to dig up much more documentation than a person with a better credit score will require. Let’s look at how much low scores can actually cost you. In this example, we are looking at a 30 year fixed rate loan of $100,000 at varying interest rates. (The monthly payments shown are principal and interest only. They do not include taxes and insurance).

Interest_Rate_Montly_Payments

The numbers in the table show how higher credit scores can save you thousands in interest. Just a 2% difference in the interest rate can add up to almost $50,000 in savings over the life of a $100,000 loan.  For a $250,000 loan, the savings is over $120,000 for the life of the loan.

2. Insurance companies – Whether it is home or auto insurance, insurance companies are now factoring in your credit scores when determining your premiums. With home insurance premiums at ridiculously high levels in Pensacola and all along the Gulf Coast, you need every break you can get. The reasoning is that people with lower credit scores are less responsible with their home life and their driving. Did you know that just a couple of late payments could cause your premium to be doubled? Add that to the increased monthly payments in the table above.

3.  EmployersA low credit score can cost you a great job.

Employers equate low credit score to irresponsibility. They want dependable responsible employees, so they are apt to hire people with higher credit scores. They don’t take into account that many low credit scores are the result of a hardship that was out of the control of the individual.

4. Landlords – Any knowledgeable landlord checks the credit scores of all applicants for rental properties. Lower credit scores equal more application rejections, and higher deposits if you are accepted.

5. Credit card companies – Lower credit scores mean lower credit limits and higher interest rates.

6. Utility Companies – Lower credit scores mean higher deposits when you order utilities such as electric, water, gas, phone service or cable service.

As you can see, lower credit scores can cost you in many ways. Add all of these factors together and you could end up paying thousands of extra dollars a year and receiving absolutely no added benefit in return.

Money_into_Piggy_bankOne of the primary vehicles for long term wealth accumulation is home ownership. At the National Association of Realtors (NAR) Mid year meeting in 2007, Laurence Yung, the Chief Economist for the National Association of Realtors, shared the following data from the Federal Reserve: “The median wealth accumulation for renters from 1995 to 2004 was $4,000. The median wealth accumulation of a homeowner was $184,000.”

How do you want your financial picture to be 10 years from now?

Don’t wait. Start now to build your credit scores, buy a home, and invest in your future.

Related Articles on Pensacola Real Estate News:

What Is A FICO Score?

The New Credit Scoring System – How Will It Affect Your Credit Score?  

How Not To Lose Your Home Loan After You Are Already Approved

Click on Pensacola Real Estate News for a list of articles indexed by category.

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  1. no credit credit card

    Thanks for sharing this post. It’s really informative and helpful. I’ll show you an article, “What Is A Credit Report and Why Does It Matter“. I find it helpful too, and it’s somewhat related to your post. :)

  2. Jeremy

    It’s amazing the amount of money that can be saved by having good credit. As someone who had issues in the past that are now cleared up, I can tell you it’s like night and day.

  3. Karl

    Thanks for the link. Should be helpful to my readers. Glad you liked the post.

  4. Pensacola Real Estate News » Pensacola Real Estate News: What is a FICO score?

    […]  Your Credit Score – The Key To Building Your Future Wealth […]

  5. Pensacola Real Estate News » Pensacola Real Estate News: The New Credit Scoring System - How It Will Affect Your Credit Scores?

    […] Your Credit Score – The Key To Building Your Future Wealth […]

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