Why is your Credit Score Important?
Credit is an essential aspect of life as an individual or a business. It gets you to want what you need at any point in time. Whether you need to take a loan for a car, house, or business investment, the status of your credit will allow you to qualify. So, if you ask me questions such as “why is credit score important to a business or why managing the credit is so important,” this is the reason. So that means you need to learn about credit as it has become a key role of our lives.
What is Credit?
According to Wikipedia, Credit is the trust which allows a financial institution to provide money to another individual or business based on requests to be paid later. Everybody needs or will need credit at one particular time in life.
For instance, when you want to buy a car or fund a business startup, but you don’t have enough money at the time. Credit allows you to collect loans to be paid later based on agreement. There are different types of credit, which include installment loans and revolving credits.
Installment loans are requested for a particular purpose, while Revolving credits are the type of credit you can keep using until you reach a defined limit such as credit cards.
Good Credit Vs. Bad Credit
“Loans are a necessary part of life for many,” says Katie Ross, education and development manager for American Consumer Credit Counseling.
You must first understand that you can either have good credit or bad credit. To get a Good credit score and maintain it means you are a trusted individual who keeps to agreements and pays up debts/loans when due. On the other hand, a person with bad credit doesn’t fulfill his/her agreement when necessary. So how do i get my free credit score you ask ? You can check out your credit score here for free.
Five Reasons You Need Good Credit
The five reasons you need good credit is the same as asking why good credit is important
or the importance of credit. We have gone through the stress of collating the reasons for you below.
1. Your Credit Can Contribute to Where You Reside
Firstly, after building your credit and you get a good credit score it can determine the kind of area you can live in. No one wants to lend an individual that finds it difficult to meet up with payments or fulfill agreements. It is risky for mortgage lenders to offer big loans for house purchase. Also, house owners use credit scores to determine who they offer houses for rent.
2. Your Credit Will Affect Your Auto Needs
You cannot lease a car without good credit because there is no guarantee that you will meet up with your monthly or yearly payment.
3. Your Dream Job May Require Good Credit
Just as your credit determines where you live, it can also determine whether you get a good job or not. Many employers check credit history before hiring their workers. For instance, if you have a bad credit history, the employer may find it hard to trust you with money. This is mostly applicable to positions dealing with finances.
4. You Need Good Credit to Live A Life Without Limit
When you have good credit, things will become easier for you. With good credit, you can easily borrow one month of utility service such as electricity supply. Most utility companies check for good credits before accepting your application.
5. You Need Good Credit for Your Business
Finally, every business requires good credit, especially startups. It will go a long way in preparing you for anything. For example, if you need some tools urgently for your business, you can easily get your loan approved with good credit.
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