why is it good to have good credit
Why is good credit so important? Today's economy runs on credit. If you want to get a
for a house or a student loan to pay for college, or if you just want to put your lunch on a, a company is extending credit to you. Your creditworthiness is defined by your and is the key to your financial life. Good credit can be the make-or-break detail that determines whether you'll get a, or. On the other hand, bad credit will make it more difficult for you to get a credit card with a low interest rate and it will make it more expensive to borrow money for any purpose, says Liz Pulliam Weston, author of "Your Credit Score. " But even if you're not in the market for a loan, good credit can have a major impact, Weston says. "Your credit information can be a factor in whether or not you can rent a nice apartment, how much you or whether or not you can get a job," she says. Landlords, insurers and frequently use credit information as a litmus test to see if the people they are dealing with are reliable and responsible. Bad credit can suggest you're a risky bet. While bad credit may only show the details of how you, some will extrapolate the characteristics from your financial life to other situations and assume that your bad credit implies that you may be just as irresponsible, taking care of or showing up for a job, Weston notes. can signify that your financial situation -- and the rest of your life -- is on the right track. P A good credit score is important for anyone to have.
Loans are a necessary part of life for most of us. Building a solid credit history and maintaining a high credit score can have a dramatic impact on your quality of life now and in the future when you're considering applying for a loan or even a. Buying a House Purchasing a house is one of the greatest investments you can make in your own future. It s also one of the most difficult ones to achieve if you don t have a good credit score. The recession caused foreclosures and short sales aplenty. Even though the housing market has rebounded, banks are still cautious about lending, with more stringent requirements than ever to qualify for a loan. If you re not ready to buy a home, it is important to know that renting a home involves a credit check for most people now. If you show delinquent credit, you may not be able to rent a house or apartment, or you may have to pay a larger deposit. Buying a Car This is a common purchase, and many Americans take out loans when they buy a vehicle. Car loans are much smaller than house loans, so they re typically easier to get with a poor credit score. However, a poor credit score will only qualify you for high interest rates and a larger down payment on a vehicle. This can mean you pay thousands more for the same car compared to someone with good credit. After you buy that new car, you will need an auto insurance policy. Almost all insurance companies now factor your credit score when calculating your premium payments, so good credit will save you money on this part as well.
Starting a Business If you re thinking about starting a business and need a business loan, your credit score and history will factor into your eligibility for small business financing. Regardless of whether you re starting a business from scratch or trying to get the funds to expand, your individual credit score will affect your ability to get a loan for your business. Getting a Job Many employers are now running credit checks on prospective employees prior to hiring them. This is especially common in the government and financial sectors. A negative score or history could potentially keep you from being hired. Getting Lower Interest Rates While a good credit score is an important factor in obtaining any type of financial assistance, many banks are still willing to give loans to individuals with poor credit. If your credit is damaged, you will have to provide more documentation for your loan. You will most likely be hit with a higher interest rate as well. This is how financial institutions outweigh the risk of giving you money. If you want better interest rates to save yourself money in the long run, keep that credit score high. Work to repair your credit score by making house and car payments on time, paying off loans before the end of the loan period, and paying off your credit card in full each month.
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