Whether you’re planning to buy a new home or refinance your current mortgage, your credit score can make all the difference in the world.
Whether you’re planning to buy a new home or refinance your current mortgage, your credit score can make all the difference in the world. Not only can a good credit score increase the likelihood that you will get approved for a loan, but a person with a high credit score might end up paying thousands of dollars less over the life of a loan than someone with a low credit score.
I don’t know about you, but I can think of a lot of things to do with several thousand dollars.
If you want to make your money go further, get your credit score as high as possible. One way that I have quickly improved my credit score – and I invite you to do the same – is by establishing a system to have my bill payments automatically deducted from my checking account.
Why Automatic Bill payment Works
A number of factors go into determining your credit score, such as the amount of debt you have and the length of your credit history. One of the biggest factors affecting your score is whether you pay all of your bills on time. The more late payments you have the lower your credit score is likely to be.
Now we all have busy lives. It’s easy to become distracted by work or events in our personal lives and forget to pay a bill on time. While it’s understandable to occasionally pay a bill late, it’s costly. If we forget to pay our bills, our credit score could go down as a result.
But we can make sure that we never have late payments again simply by establishing an automatic bill payment system. Since creditors want to make it as easy as possible for you to pay your bills, most lenders have a system that’s very easy to use.
I’ve heard some people say they don’t want their money automatically deducted from their account because they’re afraid they would not have control over their money. While I can understand the fear, I’m telling you it’s the other way around. Setting up an automatic bill payment system gives you more control over your money.
I set up an automatic bill payment system because I wanted to increase my credit score and make sure every single bill was paid on time. Whether I owed $25, $50 or $100, I made sure the money went directly from my bank account to the creditor before the money was due.
The Proof is in the Credit Score
Not only did I save time because I no longer had to stop what I was doing to pay my bills, but within about two months, my credit score had risen 101 points. Had I been shopping for a loan, that change in my credit score could have helped me to qualify for a lower interest rate.
When I talk to people about ways that they can improve their credit, many are surprised to find that there is something so easy that they can do. Automatic bill payment is a strategy that a lot of people aren’t taking advantage of but that many more people should.
The key to success is information. Are you happy with your credit score?