Credit is a fundamental aspect of today’s society; it affords people of all ages with the finances to move their lives forward based not on the individual’s current worth, but rather their history of reliability. However, the importance of building and maintaining a high credit score is not always appreciated until you’re declined for that car lease, mortgage, etc. that you’ve long desired.

Keeping your credit score in the 700-800s can help you in many ways:

Ability to take out a Mortgage / Lower Interest Rates

Whether opening up a new credit card account, taking out a personal loan, or buying a property with financing, having a good credit score is extremely important, as it is directly tied to your ability to even secure such financing, as well as the interest rate that you will receive. Before the economy tanked, sub-prime lenders (those willing to lend money to unqualified individuals, but with higher interest rates) were in abundance, and it was possible to obtain a loan even with a poor credit score. Today, it is nearly impossible to get a mortgage with a credit score below 620, and in order to get the most favorable rates, you will need a score of at least 750. 
 
Better Insurance Rates

Many people don’t realize just how important of a factor your credit score is when taking out a new insurance policy. The vast majority of auto and homeowners insurance providers are now using your credit information in their decision process for new policies. Policy seekers with bad credit may end up paying 20 to 50% more in auto insurance premiums than those with good credit. An interesting fact worth noting is that drivers at the bottom end of the credit spectrum tend to file about 40% more claims than drivers with good credit, which suggests that responsible handling of finances may be correlated to responsible driving habits, and helps justify auto insurers’ issuance of higher premiums to drivers with bad credit.

Overall Credibility & Leverage:

Having a good credit score will help you in several financially measurable ways, but there are several intangible benefits that you will reap as well:

  • When renting an apartment, a tenant with a good credit score is far more appealing to a landlord than one with low or mediocre credit. Some landlords may even be willing to accept a lesser offer from a credible tenant, as they may fear that the less-credible tenant with the more lucrative offer won’t pay on time or will vacate their lease.

  • A good credit score will make the process of acquiring loans far more straightforward, as you will most likely have to present less documents than those with questionable credit histories.

  • Beggars can’t be choosers… an individual with bad credit will be lucky to get a loan at all, and likely will have very few options to choose among. Quite the opposite is true for people with excellent credit scores, as your track record of responsibility and reliability will allow you to shop around and obtain the best interest rates available.

 

Originally from Condo.com – Condo News