Getting “Credit” for Smart Financial Decisions

There are many arguments for and against the need to have a “good” credit score. If you search the internet information on attaining or maintaining a good credit score, you will find lots of opinions. And neither side is wrong.

However, you will find that both sides do agree on one thing…having a good credit score is a lot more beneficial than not having one. In other words, the system is set up so that your credit score

A good credit score can make your life much, much easier than if you have a so-called bad or low credit score. There are a few common reasons for this, and a couple not so common reasons.

Why it Matters

  • Makes getting a loan a lot easier: That is loans for a car, mortgage, credit card or an installment loan. Having a lower credit score usually leads to higher payments if you do get a loan due to a higher interest rate. And you might find the loan application process to be more complicated and may take longer if you have bad credit.
  • Some employers consider your credit score in the hire or retention process: if you live in a state where this is unlawful or restricted, you will be in a better position. But in the states where it’s allowed, employers can see the bigger problems that have caused the low score. An employer might look at your credit history and determine that you are not trustworthy or reliable. Especially if your report shows frequent late or missed payments.

Insurance companies may offer you a lower rater: Having good credit may lead to lower homeowners, rental and car insurance. Many insurers owe a good credit score as a sign that you are financially responsible as well. While a few states don’t allow this type of research by insurance companies, most do. This means that a good credit score could save you money in the long run through lower premiums.

Renting an apartment or home is easier: When you start the search for your future living space, such as an apartment or other rental, a good credit score might be the difference between a nightmare and a peaceful place to call home. A good credit score can save you from a flat out refusal of you rent application or a much higher monthly rent cost. Landlords don’t want to risk renting to someone who might frequently miss their payment deadline or not pay at all.

Utilities for your new place are easier to get: Although many first time renters don’t consider getting utilities approved and installed a bit deal, the process can turn into a real headache if your credit score is low. If you have bad credit, some utility companies might require a hefty deposit or even a co-signer before they will install the service. Imagine sitting in your new place, with no water, phone or cable service. This could easily be the scene if your credit isn’t up to par.

Having Good Credit is Worth the Work

For the reasons stated above and several I haven’t covered, if you have a choice between maintaining good credit and simply blowing it off, I recommend you choose the first option. Although you don’t need to use credit cards or have debt to get to a higher credit score, paying your bills on time, having a lengthy credit history and having variety in your payment history all help with getting to and keeping your credit score in “good” range.

So whether you’re Team “Good Credit Matters” or Team “It’s No Big Deal”, understanding how your credit score impacts your daily financial outcomes is important. So shoot for that higher credit score as you go about your daily life. Having a good score certainly won’t hurt and the benefits will outweigh the time and effort you put into getting that score until you are in a financial situation where it really doesn’t matter what your score is.

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