Why Is It Important to Build Credit?

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.