The Benefits of Good Credit: Why a High Score Matters

Your credit score is one of the most critical numbers in your life. It can determine whether you can get a car or a mortgage loan, how much you’ll pay for insurance, and even whether you can get a job.

A bad credit score can mean you’re stuck renting an apartment for the rest of your life, while a good credit score can help you live the life you want. There are options for being approved for bad credit auto loans that can help you build your credit to pursue your goals.

There are many benefits of having good credit, but here are some of the most important ones:

Loan Rates

You’ll save money on loans. A bad credit score means you’ll pay higher interest rates on loans, which can add up to thousands of dollars over the life of the loan.

You’ll have more borrowing options. With bad credit, you might not be able to get a loan at all. Or, if you can get a loan, it will likely be for a smaller amount with a higher interest rate than someone with good credit can get.

Insurance Rates

You’ll get better insurance rates. Insurance companies use your credit score to determine your premiums, so a bad credit score means you’ll pay more for car, life, and even health insurance.

Employment Opportunities

You may be able to get a job. An increasing number of employers are using credit scores to screen job applicants, so having bad credit could mean you won’t get the job you want.

Financial Security

You’ll have peace of mind. Good credit means you won’t have to worry about being denied a loan or stuck with high-interest rates. You can rest assured knowing that you’re in good financial shape.

How to Fix Your Credit

If you’re looking to improve your credit score, you can do a few things.

Check Your Credit Report For Errors

Carefully check the credit report and dispute any errors as soon as you find them. 

Make Sure You’re Paying Your Bills on Time

While debt-related bills will impact your credit score more, missing a rent or mortgage payment will hit much harder than a Netflix subscription.

Credit Monitoring Services

Consider signing up for a credit monitoring service to help you keep track of your progress. These services are also helpful in avoiding identity theft and fraudulent charges on your accounts.

Authorized User

Partner with someone you trust who has good credit and spending habits as an authorized user.

Debt Snowball Paydown Plan

The Snowball concept of debt payment by Dave Ramsey is the idea of devoting a specific amount to paying past debt. As the debts are paid off, you apply that payment amount to the next smallest bill. As you pay each invoice off, the payment for the next bill is more significant.

Credit Builder Account

A credit-builder account is an installment loan with the funds held in a savings account as collateral. You make monthly payments, which creditors report to the credit bureaus, and when the loan is paid off, you receive the funds from the savings account.

Credit builder accounts are a great way to help improve your credit score. If you have poor credit, a credit-builder account can help you build up your credit history and improve your score. A credit-builder account can help you save for a big purchase, like a car or home, if you have moderately healthy credit.

To get started, check with your bank or credit union to see if they offer credit builder accounts. Set a reasonable goal, using the SMART Goal concept to make your goal more likely to succeed. For example, a goal to improve your credit score by 100 points in one year is a SMART goal.

• Specific goals are narrow and describe details of the “success” criteria.
• Measurable goals are those where you can track progress and determine whether or not you are on target.
• Attainable goals are ones that you can reasonably achieve, given your current circumstances.
• Realistic goals are those that challenge you but are still achievable.
• Time-bound goals have a deadline so that you can track and measure progress.

Start small and gradually increase the amount you contribute to your monthly credit-builder account. You may even consider setting up automatic payments, so you don’t have to think about it.

By making regular payments into your account, you’ll not only reach your goal but also build your credit history and improve your score. And that can mean significant savings on future purchases.

How Does Bad Credit Effect My Finances

A bad credit score can make it challenging to qualify for loans and credit lines and lead to higher interest rates and insurance premiums. If you’re looking to finance a car or home or even rent an apartment, a bad credit score can stand in your way.

In the employment world, bad credit can be a kiss of death. Many employers view lousy credit as an indication of financial irresponsibility. As a result, applicants with poor credit are often denied employment.

Unfortunately, this can create a vicious cycle for those with bad credit: because they can’t find a job, they can’t improve their financial situation, and because their financial situation is poor, they can’t find a job. However, some things that people with bad credit can do to improve their chances of finding employment.

First, they should focus on jobs that don’t require a credit check. Second, they should be prepared to explain their financial history in a positive light. Finally, they should highlight any other qualifications or skills that would make them a good employee. By taking these steps, people with bad credit can improve their chances of getting hired.

Poor Credit – Sticky Situations

That’s why it’s so important to keep your credit score high. A few simple steps, like paying your bills on time and maintaining a good credit history, can go a long way towards helping you maintain a good credit score.