Why is good credit important? It's a way of life. It's a barometer for how good or bad your finances are. You need to understand how it works to obtain the lifestyle you want
Unfortunately, many of us aren't taught in school how important credit is. In most cases, we're on our own in terms of education. You want to know how to build your credit but where do you turn?
This can either work to your benefit or detriment. It depends on where you look and your connections.
This guide will explain the importance of good credit and why it matters.
Why is Good Credit Important?
At a base level, good credit is like getting good grades or rising in a company. It takes hard work and diligence in every facet of the process.
What is considered a good credit score? The credit score range is 300-850. Seven hundred or above is a good credit score range and 800 or above for an excellent score.
A higher credit score means creditors have confidence that you will pay back what you owe on time.
You should be aware that credit scores aren't one size fits all. Creditors can set their standard for what good credit and bad credit is. It helps them determine who they want to attract.
Despite the chaotic year we had in 2020, consumers had an average FICO score of 710. Usually, people fall in line somewhere between 600-750.
Credit Affects Your Loan Chances
If you want to make major purchases such as buying a house, car, starting a business, or investing in real estate, your credit score is a critical factor in determining whether you can do that.
How good does your credit profile have to be? You need a 720 FICO score and 3-4 positive accounts with no collections, late payments, and excessive inquiries (two in the last two years).
On the Job Hunt? Credit Plays a Role in Employment
Employers believe that good credit history is an indicator of trustworthiness, self-discipline, and smart decision-making.
If you have financial issues, employers will think you have poor judgment, you're an erratic spender, and you're irresponsible.
Credit or financial checks are used by 25 percent of HR professionals when hiring for new positions. Six percent do that for every applicant.
Bad Credit Means Security Deposits Have to Be Given
You have to prove yourself to the utility companies and pay a security deposit upfront. It's not ideal, but it will have to be done.
Insurance Companies Gauge Credit as a Risk Factor
The quality of your credit determines your insurance premium. You will have a lower premium if you have good or excellent credit and a higher one if it's bad.
Good Credit is Something to Be Proud Of
Good credit allows you to have more freedom with your money. If you're someone who pays household, car, and credit card bills on time, or you make an effort to, you'll be in good shape to buy the things you want.
On the other hand, if you're someone who has had credit issues, and you worked your way back, congratulations. Building your credit is not an easy thing to do, depending on the circumstances.
Need Credit Help? Come to Us
Check out our services to get your credit on the right track. With our help, you will gain more in-depth knowledge to answer the question, why is good credit important? Call us at 330-576-5425.