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8-23-2019 • Your Credit Score. Why is it Important?

CONSIDER THIS: Most people know that having a good credit score can mean getting a good interest rate on a car or mortgage loan. But there are other reasons why you should maintain a good credit score. 

First, you need to know the difference between a credit report and a credit score. And there is a difference. A credit report is a detailed history on your credit information featuring your personal identity information, list of debts, balances, any delinquent payments and bankruptcies, inquiries, and closed credit accounts. A credit score, on the other hand, is the three-digit number based off your credit report. It helps lenders decide if you are likely to pay your debts or not. Scores range from 300 to 850. The higher the score, the better your credit. 

Here are some areas of your life that may be affected by a high or low credit score. 

Insurance. Whether it’s for your car or home, a poor credit score can cost you hundreds of dollars in additional premiums.

Employment. Sometimes your prospective employer can take a look at your credit score to determine level of responsibility.

Cable or cell phone. Some providers are now checking credit scores before you can sign up. You might have to pay a deposit if your credit is not good enough.

Renting. You already know having a good credit score can mean the different between a great or mediocre interest rate on a mortgage loan. But renting also may require a credit check. And not having good credit could mean a larger deposit.

Starting your own business. Thinking about starting a business? You’ll likely need a business loan. Your credit score might decide if you get one or not, and if you’ll get a favorable interest rate.

In the end, if you want to save money, it is to your advantage to maintain a great credit score. How do you do that? Consider talking with someone at your financial institution. Credit unions usually offer workshops on the topic or provide counselors that can assist.