You’ve probably heard about credit scores before, but wondered why it’s so important to have a good one, what impact it could make on your life and how you could start improving yours. Credit scores can seem a bit confusing if you’re not used to how they work, and you might be surprised at the wide-ranging impact they could have on your everyday life. However, your credit score can have an effect on everything from your home mortgage to your next car purchase to your employment opportunities and much more, so working on improving it should be at the top of your financial to-do list. If you’re still unsure about investing the time and effort to get a better credit score, here are just a few of the reasons why this number can make such a difference in your life.
It Might Make Future Home or Car Purchases Easier
You may already be aware that a credit check is part of the mortgage or car loan application process, but what you might not have realized is that a great score can actually help make those purchases easier. For instance, with a high score:
- You could get a better interest rate on a home mortgage
- You might qualify for better car loans and financing deals
- Creditors and lenders may be more willing to be flexible and work with you
Potential Employers Could Be Impressed With Your Financial Prowess
The fact that your credit score may sometimes be part of your employment background check may come as a surprise, but many potential employers use it as a measure of how responsible and reliable candidates are. This means that if you have a great credit score, potential employers could be impressed with your financial prowess, and may even be more likely to offer you the job!
It’ll Be Easier To Get Credit Cards and Loan Approvals in the Future
With good credit, banks and other lenders may be more incentivized to work with you, and more comfortable with offering you loans and future credit. If you plan to apply for credit cards or loans, including home loans or business loans, in the future, a high credit score is essential.
It Could Actually Help You Save Some Money Over Time
You might not think your credit score has anything to do with your ability to save money, but the fact remains that when you have a poor credit score, you may be stuck with higher interest rates. This means paying more in interest over time, which lessens the amount of money that could have gone to savings or other expenses. Some ways good credit could help you put more money back in your pocket include the following.
- You may end up paying less in interest over time
- You could become eligible for better loan offers in the future
- Your security deposit amounts could get reduced due to your higher credit score
You Might See Your Total Credit Limit Go Up
Another surprising benefit of a high credit score is the credit limit. When you get down to the details of how credit works, however, it may not come as such a surprise: Lenders tend to offer higher limits to borrowers who have demonstrated that they are reliable, trustworthy and capable of making on-time repayments. If your score is low, you may only be offered a low credit line; improving your score, on the other hand, could potentially qualify you for a higher limit.
Your credit score can have a surprising range of impacts on your everyday life. In order to improve your personal finances and avoid getting into a tough financial situation due to bad credit, it’s essential to place boosting your credit score and improving your creditworthiness at the top of your to-do list today.