5 Reasons Why You Should Care About Your Credit Score
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 credit score.
1- Affects your chances of getting credit or loans
It’s likely that you’ll 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 favorable credit rating increases your likelihood of getting approved for credit or a loan, while a poor score 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 credit score, you’re more likely to qualify for the most competitive credit card rates available in the market. Conversely, if your credit 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.
4- Affect 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 credit 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 credit 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 basic necessities. This makes it crucial to prioritize and maintain a good credit 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 own scoring systems that range from 0 to 900. However, as a general guideline, a good credit rating is typically considered to be two-thirds of the maximum possible score.
Which score matters the most?
While there isn’t a specific credit score that holds more weight than another, your credit score is the only one that truly matters. However, your credit history and any negative marks can work against you and impact your score.
How to check your credit score?
In the UK, you have the legal right to check your credit score for free at any time using any of the following CRAs:
However, if you want to see your full credit report, you’ll need to sign up for a 30-day free trial or a paid subscription after that period.