Here’s why a credit score is important when it comes to borrowing money or saving on insurance premiums.
Are you looking for a business loan? Or you are planning to buy a house or car?
No matter what you buy or where you invest in, you are more likely to seek a lender like a bank for financial help as these expenses are beyond your savings.
And credit score is the first thing your lender will check when you apply for a loan.
A credit score determines your creditworthiness. They can determine whether you have the ability to repay the borrowed amount. Therefore, it is essential to maintain a good credit score that is 750 or above. Good credit history makes you an attractive borrower for various loans. However, building a good credit score is more than just get eligible for loans. Here we have listed the benefits of having a good credit score.
Credit Score Helps Your Borrow Money:
This is the first reason why your credit score is essential. You need to borrow money at some point in your life, especially if you make heavy purchases like buying a house. Many people also need a loan to buy a car. A business credit check is performed to determine the credibility of a business.
This is where a credit score comes in. A sound credit score helps you save thousands of dollars over the life of a loan. For example, you get a better interest rate with a good credit score than you would with a lower score. On a 30-year mortgage for $200,000, the savings can be big.
If you can get a rate of 4.29 percent on a $200,000 mortgage, your total interest will account for $155,884. In case of having a lower credit score; your interest rate can be 5.5 percent, meaning that you will have to pay nearly $53,000 more like the internet. Besides, you will have to pay off a higher monthly payment.
The same thing can be said for borrowing for a car.
Remember, the score your lender sees may be different from the score you have, depending on the credit reporting agency a lender uses to fetch your scores.
Credit Score Influences Your Insurance Premiums:
Many states let insurers use your credit score for fixing the insurance premiums. A lower score means you have to pay more in monthly installments. Luckily, you can save up to hundreds of dollars with a good credit score.
Credit Score Helps You Get Better Terms for Cable or Internet:
Did you know? Your credit score is also on the radar of many Internet, TV and cell phone services vendors. You might not be qualified for an account with them with a bad credit score. Even if you get services somehow, you might be asked for a security deposit or pay some part of your service upfront. This can be expensive and exhaust your budget as well.
Credit Score is checked by Employers:
It is increasing among employers to check the creditworthiness of their employees. The employers justify this practice to check the history of responsibility of their employers.
So you must have understood the importance of having good credit scores. Credit scores help you get loans and determine your credibility as a business or individual. Therefore, you should care for your credit score.
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