Your credit score is a window into your debt history and can have a vital impact on your financial stability. If you have a bad credit score, you will suffer financial limitations. On the other hand, if you have a good credit score, there many benefits and financial possibilities. The purpose of this article is to outline these consequences and benefits so that you are able to see the importance of your credit score number.
A bad credit score can lead to:
- High Interest Rates
If you have a bad credit score (generally considered to be less than a score of 600) there are several limitations when it comes to borrowing money. Lenders will be less likely to give you loans and, when they do, you will have to pay a much higher interest rate.
- Limited Housing Options
In addition, the consequences of a bad credit score can also impact your housing and work situation. Landlords have the legal right to check your credit score before allowing you to sign a lease and can refuse you if they feel your credit score is too low.
- Diminished Job Possibilities
When you’re looking for a job, prospective employers can use your credit score to decide if they want to extend a job offer. A low score can lead potential employers to assume you aren’t responsible and thus ruin your chance of getting the job.
A good credit score means:
- Lower Interest Rates
On the other hand, having a good credit score can create a bright financial future. The most obvious financial benefit is low interest rates on loans. An interest rate is what it costs you to borrow money from a lender, and if that lender can be assured that you will pay him or her back, the interest rate generally is much lower.
- More Financial Opportunities
You will also likely have better car insurance rates, an easier time finding an apartment or house, and will be approved for higher limits on credit cards.
- Increased Financial Security
A good credit score means security for your future. You can be assured that your financial future is stable and that there will be many affordable loan options available to you.
In conclusion, your credit score affects your financial future in a multitude of ways. While a bad credit score presents serious limitations and consequences, a good credit score can offer an incredible amount of money-saving benefits. Keep careful watch over your credit score so that you can work to improve it to an acceptable number if necessary. Pay your bills on time and seek the advice of a credit counselor if you feel you need more help to raise your credit rating.
