Credit
November 7, 2018

Why Is It Important to Build Credit?

Written By Mary Beth Eastman
Last updated March 15, 2019

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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. In fact, you can see the best credit cards for your credit score right here.

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.

About the Author

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

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