Only about 20% of consumers have what’s considered excellent credit or a score of 800 and above. Are you one of them?
Why is it important to have good credit anyway? What does it affect and how much?
In this article, we will explore the reasons why credit is important and how it impacts the compartments of your life.
Why Is It Important to Have Good Credit?
Having good credit affects nearly every bit of your lifestyle, from where you live and even your career.
Home
Having a good credit score is important because it can affect your future living space. When you go to apply for a mortgage, a lender checks your credit, and if they see your credit isn’t good, they could see you as a risk. If your credit is exceedingly poor, you could get denied completely, or be slammed with a high interest rate.
When you keep your credit in check, applying for a loan and being accepted is much easier, along with a lower interest rate on loans.
Job Opportunities
In some cases, some employers will check an applicant’s credit report to see if they’re financially stable. In other words, if your credit is in poor shape, it could cost you a job.
Buying A Car (Plus Insurance)
107 million people in the United States have car loans. Even though buying a car is less complex than filling out a mortgage application, with bad credit your rate could be significantly higher than someone with excellent credit.
If you had a specific car in mind to purchase, it could be impossible to achieve due to the limitations from poor credit. Insurance companies can check your credit now to see what for what rates you’re eligible.
Credit Card Approval
There are plenty of credit cards for excellent credit, but not so many for those with bad credit. If you find yourself in need of a credit card, bad credit could be your hurdle. Rates will be higher, and just like a mortgage, you could be denied.
Utilities
While needing loans is a more obvious reason to keep pristine credit, you might be surprised to learn that having a good credit score affects your utilities.
Utility companies like gas or electric, (for some, even the phone bill!) could check your credit score before issuing your service. If your score is too low, a deposit might be necessary to keep the lights on.
Negotiations
For those with a higher credit score, they have the power to negotiate interest rates on credit cards or other loans.
An excellent credit score typically means you have multiple offers from lenders, so you have a bit of leverage when it comes to agreeing upon an interest rate. With bad credit, lenders are not as eager to work with you and be firm on their rates and offers.
Is Credit Important? Yes!
Why is it important to have good credit? Because it touches nearly every aspect of your life. It’s the gateway to living the American dream. How is your credit doing?
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