When you take out a loan, you’ll be expected to pay interest on the total amount. While interest rates vary, they can be adjusted over time through loan refinancing. However, if you’re looking to get the best rate possible, you’ll want to fix your credit before starting the refinancing process. The personal banking experts at FCN Bank in Brookville, IN, explain why.
The Higher Your Credit Score, the Better
People with low credit scores often only qualify for high interest rates. This is because the lender considers the loan at higher risk of default. If you work to raise your credit score, you may qualify for a lower interest rate when you refinance, saving you hundreds in interest payments over the remaining life of your loan.
How You Can Improve Your Credit
Since low credit scores can be caused by a variety of factors, there are many different ways to start repairing your score. If you’ve run up a balance on your credit card, start making more than the minimum payments and pay down the amount you owe. Make sure you’re paying bills on time every month. Reducing your overall debts will help raise your credit score quickly.
While it may be tempting to pay off a credit card and close the account to avoid falling into debt again, it’s best to keep the account open. The older your credit history is and the higher your total credit limit, the better your score will be. Just be mindful of how much of your credit limit you’re using each month and work to keep it low.
Before you apply for loan refinancing with FCN Bank, make sure your credit score is as high as possible. This will help their bankers get you the best rate possible and save you money in the long run. Learn more about their services online and call 1-800-575-3262 to speak with a mortgage specialist.