Some people take great pride in maintaining a high credit score, while others believe this to be overrated.
Don’t make the mistake of turning the other way and hoping that everything works out with your credit score. This is way too important to your financial health, both in the present time and in the future.
There are many reasons why a high credit score is important, including but not limited to the following:
1. Loan Approval
With fair or poor credit, it’s much more difficult to secure a loan. So, this can make it difficult to buy a car or home. Just the same, you may not qualify for other types of loans, such as a personal loan or home equity line of credit.
As your credit score increases, so will the likelihood that you qualify for any loan you apply for.
2. Best Loan Terms and Conditions
You don’t want to simply qualify for a loan. You want to qualify for a loan with the best terms and conditions.
For example, there’s a big difference between a mortgage with a four percent interest rate and eight percent interest rate. Over the course of 15 or 30 years, the lower interest rate will save you tens of thousands of dollars.
3. Easier to Rent
Just the same as buying a home, it’s much easier to rent when you have good or excellent credit.
Without this, a property manager or landlord may turn down your rent application as they have concerns about your ability to pay in full and on time without fail.
Note: if you have a low credit score, you may also have to pay a larger security deposit.
4. No Co-Signer Necessary
It’s not the end of the world if you have to find someone to co-sign on your loan, but it’s not always as simple as it sounds.
With a high credit score, it’s less likely that you’ll require this type of assistance from a family member or friend.
5. Peace of Mind
For many people, this is the number one benefit of a high credit score.
You don’t have that nagging thought in the back of your mind that your finances are heading down the wrong path. Instead, you feel good about what you’ve done in the past, where things stand in the present, and what’s to come in the future.
As you can see, it’s important that you do your best to maintain a good to excellent credit score at all times.
When you do that, you’re in position to take advantage of the five points above.
When was the last time you checked your credit score? Were you happy at the time, or did you realize that there was work to be done? What steps are you taking to boost your credit score?