The difference between good and bad credit can make a world of difference when negotiating life's biggest purchases. Having good credit benefits you far beyond what you may think.
Lenders and employers know that maintaining a good credit score takes effort and responsibility. In general, the better care you take of your credit score, the better payoff you’ll receive.
Learn how those three digits (credit score) can impact your life:
It can help you get into your dream home
Bad credit is a major hindrance when it comes to securing a loan. Mortgage lenders must confirm a reliable credit history for every loan-seeking borrower as that is an indication of likelihood to repay a loan. People with better credit history typically obtain financing with better loan terms. Having bad credit could possibly increase your cost to borrow or even result in a lender's unwillingness to provide a loan. It can also impact the decisions of landlords and their rental properties. Like mortgage lenders, they are more willing to trust those with good credit to make timely monthly payments.
It can help you qualify for lower interest rates
In recent years, we have seen more lenders approving lower credit scores for loans; however, it doesn't necessarily equate to getting great deals on purchasing cars. Essentially, the lower a credit score, the higher an interest rate because folks with lower credit scores pose a greater threat of repayment to lenders. Those with poor credit should consider saving money for a more substantial down payment or consider purchasing a used vehicle at a lower sticker price. The bottom line is, lower interest rates means lower monthly payments— naturally saving you money.
It can place you ahead of the competition when applying for a job
When companies seek new individuals to add to their team, they are looking for responsible candidates they can trust to do their job effectively and represent the company well. As a part of the background check process, some Human Resource Managers review credit histories as a measure of accountability and character. According to a Salary.com, “the rule of thumb when it comes to the numbers is that they are usually looking for a credit score of 750 or better when considering a candidate for employment.”
It can provide you with higher spending limits on lines of credit
Individuals who make late payments, default on loans, or even experience bankruptcy often struggle to qualify for credit cards. And, when they do, they are often accompanied with higher interest rates and lower credit limits. One solution to help rebuild credit might be secured credit cards. Some providers offer cards without a credit score. They require a security deposit against the card limit in case of default and commonly convert to an unsecured credit card after a set amount of timely payments.
It can provide access to student loans
Looking to qualify for a Federal Direct PLUS student loan? As part of the loan application process, your credit history is reviewed. Bad credit may impair your ability to qualify for federal, or perhaps even private, loans to cover your tuition.
Good credit or bad, it's important you are knowledgeable about your credit history and score before applying for a line of credit. If you’re trying to get your credit score back on track or trying to maintain a good credit score, be sure to visit Get Your Credit Score Back on Track in 4 Easy Steps.