How Important Credit Score Is?
It is undeniable that more and more people are now availing credit cards. Especially when investing in a property using a credit card is a huge help. It’s a no-fuss cash alternative. With one swipe, and you’re getting the property that you want to have. Who wouldn’t want that? Right? But the advantages you can have can go far beyond convenience – that is, if you have a good credit score.
So, what exactly is credit score?
A credit score is a three-digit number calculated from your data-rich credit report. And before lenders can decide whether or not you are capable of loaning, they will determine your credit score first if it’s creditworthy for a mortgage. The higher your credit score is, the higher the possibility that your loan will be approved. A good credit score is usually 720 or higher. However, the standard of the credit score will depend on the lender. That is why it is important to you if you keep building your score to receive the most favourable interest rates.
It determines whether or not you’re approved for credit
Again, lenders will determine if they are going to accept your credit or not. Your credit score is a deciding factor if you are capable of loaning. Of course, lenders are also careful with that matter. If they think that you don’t have a good credit score, it only indicates that you are not a reliable borrower –which can affect your future purchases. Although other loans are available for you, you don’t want to rely on pawn shop loans, payday loans and other loans that have higher credit rates.
It determines how much you pay in interest
Despite having a lot of expenses, we still want to save money. Right? By improving your credit score, you will save more. For instance, if you are consistent in paying your bills on time with the use of your credit card, you can improve your credit score. The higher your score is, the less interest rate you’ll most likely pay each month and overall. Moreover, a good credit score is probably the most potential in saving money than availing clipping coupons. So, fret not! Just make sure you take good care of your credit score for as not to worry about its interest rates.
It builds your credit history
Having a good credit score is an advantage since it has a positive effect on your lenders. They can tell if you are a potential buyer or investor through your credit score. And paying your bills on time can also build the reputation of your credit history. Additionally, more lenders are most likely willing to let you avail a loan since you are a trusted borrower.
It will influence your ability to find a place to live
Before you decide on buying or renting a property, make sure you have a good credit score. Since aside from the lenders, most landlords will also check your score as part of the rental application process. And if you are planning to buy a home, a good score is also one way for you to be qualified for a mortgage. Whether you like it or not, having a good credit score is a must for you to find a decent place to live.
Bonus: Tips to have a good credit score
- Pay your bills consistently and on time
- Avoid credit card debt
- Don’t apply for too much credit at once
- Check your credit reports at least once per year
(Correct as soon as possible if you spot a mistake)
For some, using of credit cards may not be their thing. But if you know how to use it wisely, you’ll eventually realize that it is all to your advantage. So, enjoy!