Q: I financed a new car last August with a local bank. At the time my FICO score was 618.
My score has since increased to 663 and I am wondering if I should refinance my car at a lower interest rate. My current interest rate is 7.4 percent on a $15,000 loan.
A: You probably could refinance your car loan and get a better interest rate than what you’re paying. Start at BankRate.com and then compare prices with online lenders as well as your credit union (if you belong to one).
But don’t stop there — there is more money to be saved. Aim to get your credit score above 700, and preferably above 720. Once your credit score hits the 700 mark, you will be able to get much better offers from credit card companies, mortgage lenders, auto finance companies and other lenders.
On your $15,000 car loan, you could save hundreds and even thousands of dollars over the life of the loan simply by raising your score and then refinancing your car loan. The same is true of a home loan.
The best thing you can do to raise your score is to pay every bill on time. You should also avoid charging more than 30 or 40 percent of the maximum credit line on your cards. And, you should start paying down any credit card debt you may have.
For more information on cleaning up your credit history, visit MyFico.com.
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