A lot of people know that a good credit score is important. They’ll know theirs. And they’ll tell you to check yours. But they might not tell you why it’s important.
When it comes to credit scores, a good rating can help in ways that a bad one can hinder. Some people might not consider their credit score because they’re not looking to buy a house or get a loan. They think that there’s nothing they want that requires a credit check. But that’s not always true. Having a good credit score can be a valuable asset in more than just the obvious ways.
Credit Scores – The Good, The Bad & The Ugly
I bet you are wondering, what is a good credit score? The range for credit scores runs from 300 to 850. Most credit scores fall in the 600-750 bracket with anything above a 700 being considered good. A credit score over 800 is clearly excellent but clearing 700 is really the key.
So then why is a good credit score important? Why does breaking through to some number matter? The most often heard response to the question of why is usually along the lines of homeownership. Having a good credit score will be important when you’re trying to get a mortgage.
But let’s say you’re pretty sure you’re never going to buy a home. Don’t be so sure a credit score won’t matter the next time you go to check out an apartment. Many rental companies will ask for a copy of your current credit score when you fill out an application. A good credit score can be more important than your current salary in some cases. It shows a long-term history of responsible behavior which is music to a rental company’s collective ears.
Taking An Interest In Your Credit Score
Even if you’re not looking to buy a home, you may be looking for a loan at some point. Good credit scores can ensure lower interest rates as well as more money approved. If you’re trying to start a small business having lower interest rates can help in that tough first year. This also applies to car payments. With a good credit score behind you, you look better on paper to anyone who is trusting you to make payments. A car dealership looks at a credit score the same way a rental company does: a record of your behavior.
Though it’s not as widespread currently, some employers are starting to ask for credit checks from prospective employees. If an employee is someone who is going to be handling a lot of money, this reflects on their ability to do so. An employer might be less inclined to hire someone that has made unsound financial choices. So far, this seems to be more of a trend in higher ranks and among positions where money is handled. It’s like a professional reference from your credit history.
A good credit score has an effect in smaller ways too. When you start an account with a utility company, they check your credit and it can change your cost or payment plan. Applying for new credit cards with subpar credit can mean higher rates, fewer perks, and more restrictive limits. With a good credit score, there’s not a thought given to either of these things. Keeping an eye on your credit and getting the score up makes things just a little easier.
If your credit score isn’t good, don’t panic! There are a few ways to start getting that number up. It won’t happen overnight and it is going to take a little work; such as setting payment reminders. Having good credit is important but not always easy. What you have to remember is that it’s worth it.
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