Fixed interest rates are key to getting a better credit score. Credit Cards in today’s world make transactions in cash almost obsolete. With the advent of the computer age, spending has now been determined not in the amount of dollars you have in your wallet but by laser wired plastic cards that slide their way to those narrow gaps on the cashiers table. However, credit cards have varying interest rates depending on what you purchase and how you use your card. Irresponsible credit card use can make you fall into bad debt and bad credit rating. Simply put, your credit rating has a huge influence on the fate of your financial future.
The main point however is how you maintain a credit rating if you own several credit cards and juggle a few loans with that too. The answer is to manage your finances responsibly. Not paying your dues on time can lead to a bad credit reputation which reflects on your credit score. If you cannot do without credit cards or loans then the least you can to is to opt for fixed interest rates. This means you have to pay a higher amount every month for a certain period but the result will be shorter repayment terms, lower interest rates and better credit reliability score. This also enables to manage your finances better because you will most likely pay the same amount every time.
Your credit rating is like your resume. When you apply for a credit card, mortgage and other loans, your credit rating is checked. Why? Because lenders like to ensure that you are not a risk and you can pay back on time. This is the reason you should be mindful of your credit score, all your future loans and credit card applications will be reliant on this. From the limit that will be set to the interest rates that will be imposed.
Fixed Interest Rates on Credit Rating
Fixed interest rates on a liability, such as a loan or mortgage, remains the same either for the entire term of the loan or for part of this term. This will give you stability, you are sure that your interest and the amount you pay every month will not vary regardless if there is an economic downturn. Fixed interest rates give a domino effect in a positive way and which in turn affects the credit rating of an individual.