If you assume that a credit score is simply a three-digit number thatâs only useful when youâre applying for a big loan, then think again. In fact, your credit score doesn’t only affect you when you are shopping for any type of credit, but also finding a decent home and even a job.
When youâre applying for a credit card, usually the best offers are reserved for customers with the best credit score. If youâre looking for a credit card that has the lowest interest rate, no yearly fees, the highest benefits and perks, you will need an excellent credit score to get considered. Besides, using your credit cards responsibly will boost your credit score even further.
Low Interest Loans
Though you will still get a loan with a low credit score, youâll be imposed with a high interest rate. So, if you want the best interest rates, then a solid credit score is prerequisite. This might not be big deal when youâre borrowing a few thousand to buy a new car, but you can save thousands in interest payments over the life of the mortgage.
Suppose you borrowed $250,000 for a 30-year mortgage. If your credit score permits you a 5% interest rate, you pay 595,639.46 in interest payments. If your rate is 7% instead, that number goes up by $711,272.25, a huge difference of almost $115,632.
Before you lease or rent an apartment or other kinds of housing, your landlord may check your credit score to ensure that you can pay your rent on time. If your credit score is poor, then your landlord might insist for proof of your income or demand a higher deposit. The landlord can also ask you for a co-signer or may reject you application straight away.
The benefits of a good credit score extends beyond banking. When you apply for a job or are considered a promotion in your workplace, your employer may be pull your credit report and the use the information to make a final decision. Yes, of course, your employer will need permission to do this, but if donât give your approval, then chances are there that you wonât be considered for employment or promotion.