Whether you realize it or not, your credit score can help or prevent you from doing all sorts of things, like getting a credit card or securing a loan for a large purchase. When it comes to borrowing money, your credit score could mean the difference between a reasonable loan rate in the single digits and something that could cost you 20 or 30 percent each and every year you owe money. In fact, a bad enough credit score could jeopardize your employment opportunities or make it to where you can’t find a place to live, meaning that new car or house purchase is not only far-fetched — it’s impossible.
If you’re not convinced yet, here are a few reasons why you should improve your credit score.
1. Lower Interest Rates
If you’re looking to borrow money for a large purchase like a car or home, your credit score is almost single-handedly responsible for the interest rate you’ll get. Good credit means you’ll have lower interest rates, so you’ll pay less in fees over the lifetime of your loan. Bad credit, on the other hand, means you’ll be spending more of your hard-earned money on interest, and it’ll take you longer to pay off your loan.
2. Lower Security Deposits
Whenever you need to sign up for a new service like electricity, gas, or even cable or phone service, your credit score matters. Bad credit means they’ll likely ask for a significant deposit because of the risk of you not paying your bill down the line. Those with good credit will have lower security deposits, and they may even be able to get their deposit waved with a good enough score or just by asking nicely.
3. Lower Insurance Rates
The third reason why you should improve your credit score is because your credit score directly affects your insurance premiums. Whether it’s car insurance, life insurance or home or renter’s insurance, a lower credit score means the cost to you will be higher than those getting comparable insurance with a higher credit score. It may not be fair, but it is what it is.
4. Better Credit Cards
With bad credit, you might only be able to get high-interest rate credit cards. If your score is bad enough, you might not even be able to get a credit card at all, which means you’ll never experience the benefits of credit card perks such as cash back or frequent flyer miles. Additionally, it means you’ll have to carry cash and keep making trips to the bank to top up your wallet. With good credit, getting a credit card is a piece of cake, and you might even be prequalified for many of them.
5. Higher Credit Limits
If you improve your credit score, you’ll also unlock higher credit card limits, which means you’ll have more money on tap to buy that new TV or furniture set without dipping into your savings. You’ll also have longer to pay off your credit card bills than someone with bad credit who may hit their max every single month.
6. Buy a Home
Everyone knows that good credit is an important aspect of buying a new home. But did you know that bad credit can prevent you from being able to buy a home at all? It’s true — unless you have hundreds of thousands of dollars sitting around, you’ll need to take out a sizable loan for that home purchase. With bad credit, even if you’re able to get a loan, you’ll end up paying a sizable chunk in fees every month, which could substantially raise your monthly mortgage.
7. Rent a Home
If you can’t buy a home, the reasoning goes, just rent. But bad credit can prevent you from being able to rent the home you’d like because many landlords now run a credit check before they’ll let you move in. So if you don’t improve your credit score, you could be locked out of many great places in your area.
8. Buy a Car
While many dealerships have their own credit lending arms, bad credit could prevent you from getting the loan you need to drive that new car off the lot. Even if you’re looking to buy a cheaper, used car, the loan you need from your bank or another lender is predicated on your credit score, and you’ll never get the loan and rate you need if your credit score isn’t up to par.
9. Get a Job
Whether it’s a local shop or a large, multinational corporation, most jobs today filter everyone who applies through a credit screening process, which means that you could be perfect for the role but no one will ever see your application if your bad credit keeps you out of the running. With good credit, you won’t be overlooked because of your credit score, and landing that great new job could also help you improve your credit score even more.
10. Start a Business
When you have bad credit, getting a loan can be next to impossible, especially a large loan like the one you need to get your business off the ground. If you do manage to get a loan, bad credit could mean sky-high interest that digs into your profits, rendering the business insolvable before you’ve even started.
If you have bad credit and need money now, talk to the experts at Wise Loan. Get approved today for a same-day loan even if you’ve been turned down elsewhere.
The recommendations contained in this article are designed for informational purposes only. Essential Lending DBA Wise Loan does not guarantee the accuracy of the information provided in this article; is not responsible for any errors, omissions, or misrepresentations; and is not responsible for the consequences of any decisions or actions taken as a result of the information provided above.