Many people run into credit card debt before they even know what happened. When the economy gets worse, we tend to increase our bad spending choices. In order to understand avoiding a financial disaster, first we must tackle the problem head on:
What is the credit crisis?
How folks fall into credit card debt:
- Expenses that exceed income
- The result of a divorce
- Poor money management
- Medical expenses
- Not enough savings
Learning Your Credit Score
The higher your credit score, the less it will cost you to borrow money, which is crucial when you want to put a mortgage on a house. The more you make payments on a timely manner and the faster you pay off your debt, the higher your score:
- Between 700 and 850 – Very good or excellent credit score
- Between 680 and 699 – Good credit score
- Between 620 and 679 – Average or OK score
- Between 580 and 619 – Low credit score
- Between 500 and 579 – Poor credit score
- Between 300 and 499 – Bad credit score
If you don’t believe your credit score makes a difference, here are the different interest rates you’d be charged on a mortgage – based on credit score.
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760 to 850 5.780% 620-659 7.096%
700-759 6.002% 580-619 8.583%
660-699 6.286% 500-579 9.494%