If you own a credit card, chances are the interest rate attached to it is in the double digits. And if you have a balance, then you’re paying much more than the actual cost of the items. Over time, the balance grows, and if you miss payments or get behind, the impact can be harmful to your purchasing power.
Here are some of the most common ways your credit score affects your financial health, plus easy tips for improving that number.
You Pay More
Right now, the average interest rate is around 15%, which means that for every $100 you charge, you’re paying $15 in interest if you carry a balance. Missing payments will make your balance balloon, and your credit score will take a hit.
The lower the score, the higher your interest rate will likely be for an auto loan, mortgage rate, insurance, etc. This means you’ll wind up paying more for these items than a person with good credit.
Credit debt causes stress. Stress can lead to sleepless nights, tension, and even sickness. Worrying about how you’ll pay off the balance can be an ongoing, unpleasant situation, the effects of which can seep into home life and work.
Changing your credit situation and getting out of card debt doesn’t happen overnight, but there are several ways to improve your credit score.
- Prioritize paying off the card with the highest interest rate.
- Review your credit score with a reputable service, such as Experian, Equifax, or TransUnion. If you see any errors, you can dispute the claims and clear your name.
- Stop making purchases with credit.
- Commit to change. Make your regular payments on time until the balance is gone.
The RAC Advantage
There’s no need to purchase furniture, electronics, computers, and appliances on credit because Rent-A-Center makes smart financial sense. At RAC, simply fill out an application or visit the nearest store, and begin shopping that same day.
There’s no accruing interest, you can stop or freeze payments whenever you need to without penalty, everyone pays the same amount, and there’s no long-term contract. You’ll never get this advantage with credit. Visit a RAC store near you, and start shopping today.