November 7, 2018

Why Is It Important to Build Credit?

Simple. Thrifty. Living.

Building credit provides you with a whole load of financial benefits. If you have a good credit rating, lenders are more likely to accept your application for a loan or credit card. Plus, you’ll have access to the best interest rates on the market. Whether you want to buy a home, start a business, or rent an apartment, having a good credit rating is essential. Here are four reasons why:

Building good credit might take some time, but it will make things easier when you apply for a home or car loan. It’s simple: Lenders are more likely to approve your application for financing if you have a good credit rating.

Although different financial companies have different lending guidelines, you are more likely to get the best deals if you have good credit.

A lender might charge you interest on a financial product depending on your credit status. If you have a poor credit history — you have defaulted on a loan, for example, or missed payments on a credit card — you might have to pay higher interest rates than someone with good credit.

Your credit rating will influence the types of financial products you choose. If you have a poor credit history, you might not be eligible for loans and credit cards from mainstream lenders. If you have a good credit history, on the other hand, you will have far more choice when it comes to financing.

If you have a good credit rating, you might not have to pay a deposit for a cell phone on a contract or an apartment on a rental lease. This is because your credit history proves that you are a trustworthy borrower: You make payments on time and are unlikely to break the terms of your agreement.

These are just four reasons why it’s important to build a good credit rating. Remember, you can check your credit report with one of the three main credit reference agencies in the United States: Equifax, Experian, and TransUnion.

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