We have a lot of responsibilities. One of those responsibilities is keeping up with our financial matters. Alongside paying bills, we are responsible for earning money, saving money, and preserving our credit ranking. Although credit ranking seems arbitrary or even counterproductive, it’s helpful. If you’re having trouble understanding why a credit score is important, follow along.
The number one reason why credit ranking is important is that it alerts creditors if you are worthy of their funding. While you can pay cash for a lot of things in your life, there are just a few things that you need credit to purchase. These purchases include housing, car payments, higher electronics, furniture, and more. To secure a loan, you’re going to have to put in an application with a creditor of your choice. They are going to run your credit to see your credit score. A high number alerts them you are a good candidate for a loan with good terms. A negative ranking alerts them that you may miss payments or overuse your credit. This can lead to denials and predatory credit terms.
Opens Up Opportunities
Aside from your creditworthiness, having a good credit score can open up opportunities. Number one, you often receive favorable credit terms. This includes mortgage and car interest rates. At a time when car notes and mortgage rates are high, this is essential. No one wants to pay top dollar for something they can get at a better rate just to preserve their credit score. Other benefits include securing funding for business opportunities, high limits, access to premium rewards credit cards, and avoiding security deposits on things like utilities and cell phone services.
How To Preserve Your Credit Score
If you’re trying to get your credit score up, there are a few things you need to remember. First, pay your bills on time. If you can’t be on time? Pay them before the 30-day late mark. This will help you avoid late payments and reductions in your score. Also, never purchase things you can’t afford or max out your cards. You can do this by staying under a 3% utilization rate.
Credit scores are important if you want to secure loans, mortgages, and even turn on your utilities, so keep them high.