Having a good credit score is essential for many different aspects of life in America. Yet, only 1.2% of Americans have a perfect credit score, while 16% have very poor credit. Why is good credit so important, and how can your credit score impact your financial situation?
Keep reading to become a credit score expert.
Better Interest Rates
When you have a good credit score, typically 700 or above, it means that you have proven to be trustworthy, that you pay your accounts on time, and you’re responsible with your money.
With this, loan lenders will be much more willing to loan to you and with much better interest rates.
Lower interest rates mean you’ll owe less in the long run. This might not seem as important now, but in a few years, you’ll be very glad you don’t owe ten times the amount that you initially took out.
You also won’t need a cosigner, while you would if your credit was poor. This makes the application process easier and quicker.
Access to Premium Credit Cards
One reason why you want a good credit score is to gain access to better credit cards that have great perks. These credit cards have low-interest rates while also offering cashback rewards, travel points, restaurant bonuses, and many more cash incentives.
If you have a lower credit score, you’ll only qualify for the most basic credit cards, which means you’ll be missing out on money-making opportunities.
It’s wise to discover which parts of your credit affect your score the most, so you can begin raising that number as soon as possible.
More Housing Options
Many people think a credit score isn’t important, so why would you want a good credit score? One main reason is for housing options.
Most apartments or houses that you rent require a good credit score. Different landlords require different ranges, but if it’s too low, your application will most likely not be approved.
Good credit scores mean you can qualify for more housing options, which will allow you to find a place that you really love instead of having to settle for one that will accept your low credit score.
Smaller Security Deposits
Whenever you buy a car, a phone, or rent a house, you’ll most likely need to put down a security deposit. If your credit score is good, your required security deposit will be much less than if you have poor or no credit.
You won’t have to prove that you have the money outright because your credit score does the talking for you.
This will save you money upfront, and you’ll also get that low-interest rate for your monthly payments, which will save you in the long run.
How Can Your Credit Score Impact Your Financial Situation?
So, how can your credit score impact your financial situation? There are so many ways that your credit score impacts your life, and you may not realize it until it’s too late.
But don’t fret. You can always improve your credit score. Learning why it’s important is the first step, and then you can start thinking about all the perks you’ll receive!
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