How high is your credit score?
If you’d rather not say, that’s alright, too. But you do owe it to yourself to at least give your score some thought.
The average credit score in America is 673, which is not too shabby. However, approximately 14 percent of Americans have no established credit whatsoever. A lack of credit is surprisingly problematic in many areas of adult life.
Read on to find out about the various benefits of a good credit score.
1. Become Gainfully Employed
Did you know that prospective employers check credit scores as part of the employment screening process?
It may seem counterintuitive to require an employee to have a decent credit score; after all, if you’re looking for a job, you may not be financially stable.
Good credit signifies trust, though. The establishments willing to lend you money are able to trust you to pay it back. To a prospective boss, that means a lot.
2. Rent a Home
One of the ultimate benefits of good credit is that you can find a decent home.
If you’re renting, your credit score can mean the difference between living in a spacious apartment and couch-surfing. In large urban areas, landlords don’t even consider applicants with fair credit scores, let alone poor or bad ones.
3. Become a Homeowner
If you’re thinking about buying a home in the near future, look into credit repair services first.
It takes at least a year to build up your credit. You shouldn’t go house-hunting until you’ve accomplished that.
If you have a high credit score, you stand a chance at a mortgage with a reasonable interest rate. Bad credit will get you denied by reputable lenders. You might still be able to get a mortgage if you find a willing co-signer, but your interest rates will be through the roof.
4. Ultimate Benefits of a Good Credit Score: Pay off Debt
Doesn’t it seem ironic that once you look financially stable on paper, it’s easier and cheaper to pay off your debt?
Of course, in order to build up credit, you need to acquire some debt. But in the long run, building up your credit score will lower your credit interest. Ultimately, this leaves more money in your pocket and more freedom to pay off your debts as you choose.
Creditors hike up interest when it’s less likely a borrower will pay back in full. They’re taking a calculated risk on you, and if your score is poor, you’re a riskier prospect. The high interest is insurance against your future nonpayment.
A good credit score means you’ve established a reliable track record of paying back your lenders. In that case, a new lender is more than happy to do business with you, even with a lower interest rate.
5. Feel Good About Adulting
Whether you’re just starting to pay off your student loans or you’re preparing for home ownership, building up your credit score is just one of those “adult” financial steps you need to take. It’s like a rite of passage.
The trick to establishing good credit is to accrue just enough debt to develop a trustworthy financial profile. With this type of trust comes responsibility and a sense of accomplishment.
Are You Ready to Take Control of Your Finances?
Now that you know more about the benefits of a good credit score, it’s time to take your personal finances by the reigns. Contact us or visit often to become more informed about making sound financial decisions.