5 Reasons To Mind Your Credit Score

5 Reasons Why You Should Care About Your Credit Score

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Your credit score can significantly impact your future plans and lifestyle, such as securing a contract or purchasing your first home. Lenders rely on your score to assess your borrowing and repayment reliability.

In essence, defaulting on payments or frequently exceeding your credit limit can cause severe harm to your credit rating. Here are five reasons why you should prioritize maintaining a good and healthy credit score.

1- Affects your chances of getting credit or loans

You’ll likely need to borrow money at some point in your life, be it for a new vehicle, purchasing your first house, or obtaining a credit card. A favourable credit score increases your likelihood of getting approved for credit or a loan, while a poor rate can impede it.

Moreover, household utilities, gym memberships, and phone contracts all involve a form of credit. A low credit score could hinder your access to these services, leaving you with no choice but to opt for pay-as-you-go alternatives.

2- Affects your credit rates

If you have a good score, you’re more likely to qualify for the most competitive credit card rates available in the market. Conversely, if your score is poor, you may be presented with a higher interest rate or a reduced credit limit, resulting in a higher cost of borrowing.

3- Employers can view your credit report

Your credit report may be requested by potential employers in certain industries during the job application process, although they are only able to access a limited view of your credit information through a soft search.

A strong credit report can work to your advantage, as a history of missed payments may make you appear as a risky candidate. Moreover, a negative credit report could be viewed as a warning sign if the job involves handling finances.

To learn more about soft search.

4- Affects ability to rent

The majority of people in the current workforce opt to rent. However, landlords or estate agents working on their behalf may assess your credit history as part of their tenant screening process when looking for rental properties.

Being trustworthy in paying rent on time makes you a dependable renter and borrower as well.

5- Affects your everyday luxuries

If you have a poor score, you may be prevented from applying for basic luxuries. These could include a mobile phone contract, gym membership, or fast broadband. To access these services, you typically need a fair score. Instead, you may need to rely on pay-as-you-go top-ups, monthly rolling SIMs, or pay-as-you-go energy supplies.

On the other hand, a good credit score can help you access stress-free luxuries that can make your life easier.

Your credit score matters

Your credit score can impact various aspects of your life, such as your job prospects, living arrangements, finances, and even necessities. This makes it crucial to prioritize and maintain a healthy score. Fortunately, you can earn positive credit points by taking several steps, which you can learn more about here.

The good news is that obtaining a good credit score isn’t as daunting as it may seem. By borrowing responsibly and making timely payments, you can improve your creditworthiness and unlock several benefits.

Frequently Asked Questions

What is a good credit score?

Credit agencies have their scoring systems that range from 0 to 900. However, as a general guideline, a good rating is typically considered to be two-thirds of the maximum possible score.

Which score matters the most?

While there isn’t a specific score that holds more weight than another, your overall score is the only one that truly matters. However, your history and any negative marks can work against you and impact your score.