This National Financial Awareness Day, Aug. 14, commit to improving your personal wealth. Following this guidance, you can raise your credit score and lower your borrowing costs at the same time. Financial advisors and loan officers at Tropical Financial Credit Union can help.
First, let’s look at ways you can better your creditworthiness.
- Frequently monitor your credit score. If your score falls below 700, read your credit report to find out why. Then, take the following steps to raise it back above that level into a range that creditors like best.
- Pay your bills on time. Late payments can lower your credit score, making it harder to obtain credit or qualify for favorable borrowing rates. Put your payments back on track to lessen the impact of those negative marks on your credit report.
- Limit or halt new credit applications. Do not apply for multiple credit cards simultaneously because the increased frequency of issuers’ credit checks will count against your score. Also, some lenders will view you as a greater risk for default.
- Apply for credit only when needed. Easy access to a credit card or unsecured credit line can tempt you to spend impulsively and end up deep in debt. Some card issuers charge over 30% on unpaid balances, creating a hefty interest charge to pay each month.
- Keep credit card accounts open. This might seem to contradict earlier advice, but when you close your account, your credit score no longer benefits from your history of on-time payments. That may not lower your credit score, but losing that positive information could slow your efforts to raise it.
One way to build a good credit score and improve your standard of living is with a home equity line of credit (HELOC) or loan at Tropical Financial. Here’s how to increase the value of your home:
- Make renovations and improvements such as kitchen and bathroom remodels and room additions.
- Reduce energy bills by installing energy-efficiency upgrades such as solar panels, high-efficiency appliances and more robust insulation.
- Repair your electrical and plumbing systems and roof to prolong your home's useful life and improve its condition for sale.
A home equity loan or HELOC could provide a second benefit. The interest paid can be deducted from federal income taxes through 2025 when the funds are used to increase your home’s value or extend its life. These include the above-mentioned room renovations, additions, and equipment upgrades. Regular maintenance, such as repainting rooms or exterior walls, does not qualify.
A home equity loan or HELOC can also slash your borrowing costs. Bankrate says that the national average in late July on $30,000 borrowed was 9.18% on a HELOC and 8.73% on a 10-year home equity loan. Both are less than half the national average of 20.73% on a bank credit card.
Want to learn more? Visit the Tropical Financial home equity lending page or contact a credit union loan officer at 888-261-8328.