Your monthly credit card statement arrived in the mail, and it is probably the last thing you want to pay for. While you could pay the bill late, your credit is likely to suffer. Most people end up paying their bills on time, because they recognize the value of a good credit score. Whether you are struggling to pay your bills or working to improve your credit, the following are six reasons why good credit matters.
1 – Qualify for a Mortgage
If you want to purchase a home, then you need good credit. If your credit is too low, then a bank may think you are a risky investment. Since there have been an abundance of short sales and foreclosures, many banks are weary about loaning money to people with unfavorable credit. When you have good credit, it is easier to qualify for a mortgage and purchase a home.
2 – Get Approved for a Car Loan
The majority of individuals rely on automobiles to get where they need to go. Since it can be expensive to purchase a vehicle outright, most people apply for auto loans. There are several different institutions that may be willing to loan you money so you can purchase a car. However, if you have bad credit, your chances of getting approved are low.
3 – Land a Job
Finding a job is often more difficult if your credit is low. Several companies run credit and background checks on prospective employees. If you have a negative credit history and low score, your may have a harder time getting a job. Companies may assume you are less reliable because you do not meet your financial commitments.
4 – Lower Your Insurance Costs
When you need insurance, an insurance agent will check your credit to determine the rates you are eligible for. Those with favorable credit usually get rewarded with better prices. If your credit is lower, you will probably have to pay higher insurance costs. After all, there is an increased risk that you may not pay your bill. Speak to a local insurance agent today for more information on how your credit affects your rate.
5 – Start a Business
Entrepreneurs rely on the help of business loans to launch their endeavors. Whether you are just starting your business or hoping to expand, you are likely to need this type of funding. When you apply for a business loan, a bank will evaluate your personal credit score to determine if you are a good investment.
6 – Qualify for Lower Interest Rates
Higher interest rates are common among people who have bad credit. After all, a bank rarely wants to lend money to someone they cannot count on. There is a greater chance that these individuals will default on their obligations. Fortunately, when you have good credit, you can secure a favorable interest rate.
Make it a Priority to Maintain Good Credit
Honoring your obligations often takes effort, but it also offers a lot of rewards. It also promotes a better financial outlook. Whether you are purchasing your first home or looking for a new job, make it a priority to maintain a good credit score.