04
Dec

5 Times Your Credit Matters the Most

Guest article by Alayna Pehrson – Digital Marketing Strategist at Best Company

According to statista.com, approximately 197 million people in the United States depend on using credit cards. Although many people recognize the importance of having good credit, some still consider building credit a waste of time. If you think credit is overrated, you may want to think again. Below are five examples of when good credit will matter the most in your life.

  1. Buying a home

If you’re in the market for a new home, poor credit can be a major roadblock. When buying a home, you’ll likely apply for a loan and lenders will look at your credit. If they see that you have poor credit, your chances of obtaining a mortgage loan will significantly drop. This isn’t the only time your credit will matter when buying a home. If you do get approved for a mortgage loan, credit can affect your interest rates and how much you will be paying monthly for your mortgage. Basically, poor credit leads to higher payments.

If you aren’t in the market for a new home, you might not be thinking about your credit. However, if you are renting an apartment or home, credit still matters. Most landlords will run a credit check in order to decide whether or not they want to rent to you. Without good credit, your chances of getting denied a rental agreement definitely increase.

  1. Purchasing a new car

Like mortgage lenders, auto loan lenders will look at your credit, and the better your credit is, the lower your interest rates will be. With poor credit, there are four things that could happen: you don’t get approved for a loan, you end up paying higher monthly payments, you have to lengthen the loan period, or you choose to finance the car through dealership options. All of these situations can be avoided by having a good credit score.

  1. Starting a business

Starting a business can be risky. To be an entrepreneur, you’ll have to consider your current credit standing. Getting approved for a business loan, like auto and mortgage loans, can be difficult if you have poor credit. Start ups are automatically seen as a risk, and if you have bad credit, you are seen as an even greater risk. If you can’t prove that you are responsible in your personal finances, then lenders won’t see you as responsible enough to manage a business’s finances. If you want to live the American dream and open your own business, then getting your credit and finances under control can save you from major stress.

  1. Getting Auto Insurance

Depending on the state you live in, your credit may affect your auto insurance rates. With the exception of California, Hawaii, and Massachusetts, many states allow auto insurance companies to check your credit report and use it to determine what your rates will be like. Some auto insurance companies have been known to reward those with great credit and penalize those with poor credit. Although there are a few other things that determine your insurance rates, credit can be a determining factor.

  1. Applying for a new job

Employers often check credit reports (not scores) when determining whether someone is a good fit for their company. If you are applying for a new job and haven’t checked your credit report recently, then you may be in for an unfortunate surprise. Companies check potential employee credit simply to see if you are a responsible person who handles finances well. If you apply for a finance-related position, your credit history is especially important. In this case, credit can either open or close many doors for you.

Don’t miss out on opportunities

Credit can help you get a home, purchase a car, start a business, get lower insurance rates, and even increase your chances of getting hired for a new job. However, having bad credit can spoil these life milestones for you. Although bad credit can be stressful, it doesn’t have to be permanent. Hiring a professional credit repair company can help you get a second chance at missed opportunities and will help you develop good credit habits for your future.

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