Whether you like it or not, your credit rating plays a very important role in your financial life. Having a poor credit rating, for instance, can put you at a disadvantage. Conversely, a good credit rating offers a number of financial advantages you can enjoy. As a consumer, the goal is pretty obvious. Aim for a good credit score as it can do wonders for you financially.
To help you understand why your credit score is very important, here are reasons why you should care whether you have a good or bad credit score:
Your credit score determines the cost of future purchases.
When lenders and other financial institutions consider your application or purchases, they look at your credit score as basis for the pricing or rate they’ll charge you. To illustrate, let’s say you’re going to buy your first car and you’re applying for a car loan. If you have a good credit rating, the interest rate will be lower as opposed to a higher interest rate if you have a poor credit score. Obviously, you’d want to maintain a good credit score if you want to end up with the best rates and prices for your major purchases.
Your credit score can affect loan, mortgage, and mobile phone application approval.
If you have a bad credit score, it can also affect your loan and financial product applications. Depending on the risks you pose as borrower, chances are high that your lender may reject your application. For example, it will be harder to get approved for a traditional loan from major banks or high street lender. Even getting a mobile phone contract will be a struggle if your credit rating is less than stellar.
Maintaining a good credit score couldn’t be reiterated more. If you don’t want to struggle with your applications, there’s really just one way to do it. Be a responsible consumer, pay your bills on time and keep your credit score excellent. You shouldn’t have any problems if you can do it.
Your credit score takes time to improve.
In the same manner that it takes time to get a bad credit score, it will also take time to improve your poor credit rating. A few late payments on your credit cards, for example, can wreak havoc on your credit score. Defaults or CCJs are even harder to deal with. It is therefore very important to be very careful with your financial moves. One mistake can mess it all up for your credit rating. When it comes to your credit rating, the trick is to not take it lightly. Otherwise, you may end up dealing with a slew of consequences that can put a cramp on your finances for a long time.
Your credit score may influence where you can live.
If you don’t own your home yet but you’re just renting, your credit score may significantly affect where you can live or rent an apartment. Most landlords check your credit score when assessing your rental application. If you have a bad credit score, you’re putting your rental application at risk for rejection. It’s pretty self-explanatory. Landlords don’t want risks and a poor credit rating translates to high risks. To avoid complications with your rental applications, the better choice is to maintain an excellent credit score no matter.