Lesson 6:
Five Reasons to Have Good Credit

Maintaining a high credit score can prove to be beneficial for anyone who is looking for financial opportunities—in any form. For example, when someone is trying to obtain a loan, a review of that person’s credit history will occur to see what type of “credit risk” that customer poses to the lender.

Below are 5 key instances for when someone will benefit from having good credit.

Purchasing or Renting Home / Apartment - While purchasing a house is an exciting investment, it can prove to be equally troublesome if the buyer does not have a good credit history. Due to predatory lending in the recent past, financial institutions are acting more cautiously, causing some potential homebuyers to rent, rather than buy. Keep in mind renting a home generally involves a credit check.

Others choose to rent a house or apartment instead, due to factors such as their locations, income, or whether or not they want the responsibility of owning a home. In this case, havinggood credit still plays an important role for the renter.

Purchasing a Car - The interest rates on car loans for those with bad credit can be problematic. For example, someone with bad credit may get approved for a car loan, but that loan may have a very high interest rate. Additionally, car insurance companies also look at one’s credit score to determine that person’s premium payments. As a result, it is important for someone to not just focus on whether he or she gets the loan, but to realize, “is this loan a ‘good’ or ‘bad’ loan?” If someone knows their credit score and financial standing, as well as what actions to take, they will have more options to choose from.

Finding Employment - It is becoming more common for employers to run credit checks on prospective employees before they are hired. As a result, if your credit score does not meet their standards, you may have a harder time obtaining a job.

Lower Interest Rates - Consumers want to qualify for the lowest possible rates. To help ensure a lower rate, make payments on time and maintain a high credit score. Think about how much interest rates matter—especially on big purchases such as homes and cars.

Credit Cards - Credit cards can prove to be useful in a number of situations, such as making big purchases without having to immediately withdraw money. While these benefits can provide consumers with a sense of “financial freedom,” it is vital that they act responsibly with their new or existing cards. As credit scores increase, cardholders may qualify for cards with better features (such as cash back, low APR, and higher credit limits).