Categories: Money

5 Reasons Why Your Credit Score Is Important

When you are in college, you may not think too much about making big purchases, like buying a new car, or buying a house. These purchases are what most people think a good credit score is for. However, buying a new car or house are not the only reasons to boost your credit score. Here are five reasons why your credit score is important.

Low Interest on Loans

Having a higher credit score can get you lower rates in a lot of ways, including interest rates for loans. Whether it is a car loan, or personal loan, you can end up with a high interest rate if you have a low credit score. That means that you will end up paying a lot more over time than you should have to. Getting and keeping a decent credit score will allow you to get a lower rate so you will end up paying much more toward the loan amount itself, instead of interest on top of it. So, save yourself some money, and work on boosting your credit score.

Easier Approval For Apartments

Much of your early adulthood will most likely be spent in apartment complexes, so getting a nicer place is something to work towards. With a good score, you could have a leg up on another person, and be able to get exactly what you want. Especially for places that have a high number of applicants, you will need to have something that stands out to the landlord. A good score can put you ahead of the pack and get you that apartment you want.

Better Car Insurance Rates

If you have a good driving record, and a good credit score, you could potentially save quite a bit of money when it comes to your car insurance. Having a high credit score can look good to the insurance company, and a bad credit score can make you pay higher premiums. This will end up costing you more in the long run, so keep your credit score up so you can keep your insurance rates low.

10 Things All College Students Should Know About Credit Scores

Approval For Credit Cards

Credit cards are a necessary evil, but if you use them wisely, then they can work for you. With a good score, it can also give you cash back, rewards, and travel points. The best cards give you the most back, but they are a lot harder to get approved for. If you have a bad score, the company can’t know if they can trust you to pay the funds off if you rack up a large bill. But, if you have a good score, you can qualify for cards that give you better cash back, or bigger and better rewards and the company will feel more comfortable giving you that because you have shown that you will pay off any balances.

Approval For Higher Limits

The credit limits can be lower for those who have a lower score since they have not proven that they will pay off their balances. With a good score, the creditors can see a pattern of paying off your balances on time. So, they will feel more comfortable giving you a higher limit. This can allow you to make large purchases without paying out of pocket all at once. You can make the purchase and be able to make smaller payments throughout the year to pay it off. With a good score, the credit company knows that you are good for it.