When it comes to life as an adult in our modern society, a credit score is something which is incredibly important. Some people may make the mistake of believing that no credit score is better than a bad credit score, however, lenders see no credit history the same as bad credit history.
It is a common misconception that credit is evil and can get us into a lot of financial trouble. While it’s true that it can have risks if not handled responsibly, credit is a great tool that can help us make bigger purchases paid back over a stretch of time rather than all at once. For people who don’t have huge salaries, having credit makes it possible to have material wealth that they wouldn’t have otherwise had.
Keeping an eye on your credit score regularly to determine how well it’s doing is crucial. Here are the reasons why.
Buying a Car
In today’s modern world having a car is an important part of daily life. Unless you have quick access to your work, grocery store, or anywhere else that you need to go on a daily basis, a car makes it possible to navigate through our busy lives without having to depend on taxis or public transportation.
In order to buy a car, a lender will look at your credit score and determine what kind of a rate you qualify for. The better your credit score is, the better your rate will be. It is ideal to pay a lower payment each month so that you have more leftover for your other living expenses such as utility bills, gas, rent, and food costs.
If you get financed for a car with a high rate then you will get trapped in car payments that you may not be able to keep up with over time. When this gets piled up with interest you could be in over your head.
Renting Or Buying a Home
In order to buy a home, you will need to apply for a loan – unless you have a few hundred thousand in cash, which is rare. In order to be able to qualify for a loan, lenders want to see that you have a strong credit history with a reputation for paying things back in a reasonable amount of time.
If you have a great credit score, you could be eligible to be financed for an incredibly low rate, leaving you able to buy the home of your dreams.
Keeping an eye on your credit score will help you determine if you have any delinquent payments or things that have gone to collections. Leaving these things unpaid will greatly affect your credit score.