As a society, we are becoming extremely dependent on credit to make financial decisions and purchases. And a better-than-average credit rating can help you significantly to that end. While credit scores usually range between 300 and 850, it’s best to maintain a score over 670 to experience a positive impact on your financial life. Here are a few different ways your credit score can affect you.
Your Credit Score Can Affect Where You Reside
Mortgage lenders will only approve your home loan if they are certain that you will not default on your loan. If you do not have a favorable credit score, they will invariably consider you a risky borrower and either deny your mortgage application, charge you an extremely high rate of interest, or require you to pay a higher-than-average down payment toward your loan for approval.
Low-Interest Auto Loans Require Good Credit as Well
Most people do not have enough money to purchase a vehicle outright, which is why they get an auto loan to finance their purchase. But many loan applicants don’t realize that their credit score can affect whether they are qualified for the loan, the amount they receive, and the rate of interest charged for the loan. Typically, those with a better credit rating qualify for a larger loan amount at a lower rate.
Employers May Check Your Credit Rating
A number of employers, today, check your credit rating as part of their hiring process. It’s important to note that employers typically check your credit reports and not your credit scores, and this is only done after you provide your consent. Still, maintaining a good credit score can help you land a great job.
You Need to Have a Good Credit Score for A Business Loan
Many people dream of becoming entrepreneurs. But most startups require a huge amount of money that people may not have on hand. In such cases, the business owner will likely have to obtain a business loan from a lender. Among other things, lenders check the applicant’s credit rating before qualifying them for a loan.
