The credit bureaus maintain scores for every adult in the United States. Your credit score is based on your financial history, including outstanding debts, payment histories and amounts of money borrowed and repaid. Credit scores are incredibly important. Employers, landlords, lenders and even academic institutions review credit scores as a way to help them make decisions. Whether it’s fair or not, credit scores are often viewed as a measurement of personal responsibility and reliability. Maintaining the best possible credit score puts you in a position to succeed. Here are a few of the benefits of maintaining a good credit score.
Helps You Qualify for Loans
Whether you are applying for a car loan, home loan, personal loan or school loan, your credit score will affect the outcome. Lenders don’t want to risk lending money to borrowers who are unlikely to pay the money back on time. Even if they do lend money to borrowers with poor credit scores, those people are likely to pay significantly higher amounts to cover the risk associated with giving them money.
Having a good credit score can offer benefits early on in the borrowing process. For example, many home sellers require a preliminary credit check before beginning to move forward in the negotiation process, which effectively disqualifies people with low credit scores from the opportunity to bid on a property. Some loans don’t require a credit check, but they often come with high interest rates.
Helps You Secure Housing
Like buying property, renting is often dependent on a good credit score. Landlords frequently check potential tenants’ credit scores to make a rental decision, because this helps them determine whether an applicant is likely to be a reliable tenant. Dealing with late and missed payments is a major time consumer, so avoiding these headaches by leasing the property to tenants likely to pay on time is a pressing concern for landlords.
From cell phones to car insurance, good credit scores indicate responsibility and the likelihood of timely payment to companies. To attract these customers, many companies in these industries offer lower rates to people with better credit scores. Several resources for maintaining good scores exist for free on the web. Don’t hesitate to take advantage of them; your future self will thank you.
Pulling yourself out of a hole in terms of poor credit score is much more difficult than carefully planning how to manage your debts from the start and maintaining a good score. When you’re putting in the hard work of managing your money, stay motivated by remembering these benefits of keeping a good credit rating.
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