Raising your credit score does not happen overnight, it could take years, but it is never too late to start. Make sure there are no late payments and pay down debt so the available credit continues to grow and the outstanding balance reduces and you should see scores increase every couple of months. You’re entitled to a free copy of your credit report once a year, but if you check your credit card statements now they provide your credit score so you can see it change. Remember the credit score/report is a month behind, so if you’re making large payments it may take a month to catch up. If you do not improve your score right away there are many important expenses that will hurt you financially.
The mortgage process can be a lengthy process anyways, but those with low credit may have to provide additional information and will pay a higher interest rate, costing thousands over the life of the mortgage. For those that rent, landlords will check your credit as well to see if you are a dependable borrower, so if your score is low they may see you as a risk to miss rent and charge you a higher monthly payment, or deny you all together.
The rates on credit cards can already be high enough for those with good credit, but for those with lower scores can look at paying even higher. This makes it more important to pay off balances each month instead of paying high interest every month or the balances will never get paid off. Having higher interest and a balance could tack on years of paying off that debt.
Much like mortgages, having a lower credit score can increase the interest rate on auto loans and personal loans, adding up to hundreds of dollars a year extra spending on interest. Those ads you see on TV for new car sales with 0% APR, those are typically for the top tier credit candidates.
Believe it or not even insurance companies can charge based on credit score and those with low scores can get charged higher premiums. In the eyes of the auto insurance company, those will lower tend to get into more accidents, and for homeowner’s insurance it’s believed that those with lower scores are more likely to file claims, being customers that are more risky.