A bad credit score can affect different aspects of your life. It becomes an obstacle in any major transaction or deal you wish to close. There are many people — from insurers to lenders to employers to landlords — who’ll take an interest in your credit score. Your credit history contains reports about how you to deal with cash, the extent to which you can be relied on especially when paying your monthly installments, and even the kind of risk you pose.
If you don’t have a good credit history, you could end up paying more cash over time and losing out on many great opportunities. Since your credit score is vital and based on the information in your credit report, it is a good idea to increase your financial reputation as it shows up on paper. Discussed below are some good reasons why you need to fix your credit score/record.
1. Reduce the Amount you Pay on Interest
Typically, low credit scores mean higher rates of interest, and that simply means higher fees on your credit card. Repairing or improving your credit score would enable you to obtain a more competitive rate of interest and save you money in the long (and short!) run.
2. Reduce How Much you Pay on Utilities and Insurance
Applying for these basic utilities is quite similar to other sorts of credit. Like most creditors, utility providers might probably extend more favorable terms and conditions if your credit score is good. With a good credit score or proven creditworthiness, it is quite possible that you may not pay any deposit or other included fees.
Also, if you have a decent credit score/history, it could help increase your credit-based insurance score (CBIS) and thus, possibly lower your insurance premium payment per month. Improving your credit score will really help you keep some money in your pocket at the end of the month.
3. Stop Paying Cash and Build Credit
In case you have a bad credit score, you’ll experience some difficulties obtaining a credit card, which implies that you will end up paying cash for everything. You may not be experiencing the financial inconvenience until the point that you have to do something like leasing a car, where you need to pay an additional deposit if you do not utilize a credit card.
4. Obtain a Higher Credit Limit
Typically, as you show your creditors that you can settle your bill on time, they will expand your credit card limit. However, a credit card issuer will first check your credit rating or score before expanding your credit limit. A terrible credit history may reduce your credit limit, thus hurting your score and increasing your credit usage.
5. Buy a Car
Car lenders or suppliers are among the many organizations that check your credit score before loaning to you. If you don’t have a good credit score or rating, your car loan request could be denied.
6. Don’t Need to Rely on Cosigners
With a bad credit score, you will always need someone to co-sign for your credit cards, loans, and homes. If you can get someone to co-sign for you, you are putting a financial weight on them without any of the advantages. Repairing or improving your credit score will spare you the time (and embarrassment) of troubling another person with co-signatures.
7. Start your own Business
Establishing a new business takes a lot of cash, so a lot of business owners depend on loans when starting out. A bad credit score can stop you from obtaining the financing you require to start your own business. You will need to improve your credit score before a bank can grant your loan request.
8. Avoid debt collector’s phone calls
Repairing or improving your credit incorporates settling those debt collection balances. Until you repair your bad credit score, you will face persistent letters and calls from debt collectors or creditors. While you can make a move to stop calls from a debt collector, collection accounts usually move from one collector onto the next. When a new debt collector receives your debt, you will need to go through the procedure of calling or sending letters to avoid their calls once again. Honestly, avoiding these annoying calls is one of the greatest reasons to improve your credit score.
9. Rent an Apartment
A bad credit score cannot only stop you from purchasing a home, but it can also stop you from leasing an apartment. Most landlords are now interested in checking credit score to determine the probability that you will be late in paying your rent. Bad credit could possibly let the landlord deny your rental application. I guess one of the most amazing reasons to improve your credit score is to finally get out of your parents’ basement.
10. So you can Buy a House
Homeownership is and has always been the dream of most people. Bad credit is the obstruction preventing you from achieving that dream. Most banks won’t give you a mortgage until you have repaired your credit score.
A good credit score can create more opportunities for you. Starting from helping you fit in for the best terms and interest rates when you obtain a loan to buying a house. Some opportunities may be the ones you never knew existed.
Homeowners will consider your credit ratings when you want to rent a house and even phone companies may check your credit ratings before handing over that iPhone Xr. Considering how essential credit scores are to your general financial health, it is wise to do anything possible to ensure you have a good score. Without a good score, it will be very hard to be financially independent. Hopefully, these are enough reasons to improve your credit score!