Having a good credit score is a sign of financial responsibility, and can be beneficial in many ways.
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What is Credit?
With all the hype and fear mongering surrounding credit and your credit score, it’s easy to become confused. So let’s start by defining a couple important terms:
Credit : A credit account is a legally binding agreement with a creditor that allows you to borrow money, open a line of credit, or use someone else’s resources (like a car). This can be in the form of a loan, line of credit, or something called a ‘demand deposit’.
A credit account is a legally binding agreement with a creditor that allows you to borrow money, open a line of credit, or use someone else’s resources (like a car). This can be in the form of a loan, line of credit, or something called a ‘demand deposit’.
Credit Score : A credit score is a three-digit number used by lenders to assess your ability to repay borrowed money.
It indicates your likelihood of defaulting on debt. The higher the number, the more likely you are to repay what you owe on time. : A credit score is a three-digit number used by lenders to assess your ability to repay borrowed money. It indicates your likelihood of defaulting on debt. The higher the number, the more likely you are to repay what you owe on time. For examples purposes, I’ll use both numbers and letters throughout this article. However, in practice only numbers are used.
HOW CREDIT IS USED?
Your credit score is a three-digit number calculated by the major credit bureaus – Equifax, TransUnion and Experian – that helps lenders assess your likelihood of repayments. The higher your score, the more likely you are to be approved for credit.
Your credit score can impact the interest rates you are offered on loans, rates on insurance policies, your ability to rent an apartment, and even your chances of being hired for a job. A high score can lead to lower interest rates and better deals on everything from buying a car or home to applying for a job or renting an apartment.
To keep your score high, make all of your payments on time and stay within your credit limit. Paying bills late or using more than what is allotted can lower your score. You may even find that lenders won’t offer you credit at all if your score is too low.
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Why Having A Good Credit Score Is Important
Having good credit is important for many reasons. First, a good credit score can make it easier to get approved for loans and credit cards. Which can also lead to lower interest rates on loans. Second, a good credit score can lead to better insurance rates and more opportunities for employment. Finally, a good credit score can help protect you from identity theft.
There are many reasons why good credit is important. Having good credit score will allow you to:
1. Obtain a loan at a low interest rate
2. Qualify for lower monthly payments
3. Get approved for a better apartment or home
4. Get a job (or at least stand out more among other applicants), if the employer requires a credit check
5. Get cheaper car insurance, if your insurance company checks your credit score
6. And more…
Want To Stay On Track With Your Credit Score?
Credit Nerd is a free credit score tracker app that helps you track your credit score, monitor your progress, and build a positive credit history. It’s like a personal finance coach that shows you the real-time impact of your actions on your credit score. With Credit Nerd you can :
-Monitor your credit score in real time
– Keep track of all the important events in your credit history
– Get alerts when things change
– Get personalized advice on improving your credit score With Credit Nerd, you can feel confident about taking the first steps to financial freedom. Start today by signing up for free at www.creditnerd.com