Credit records are used for a variety of things, from setting up utility accounts to buying a home, and the better a credit is, the easier many routine tasks will be. Bad credit can make it difficult to open a bank account, rent a home, or get a good interest rate on a car loan while good credit will pave the way for a variety of situations.
Good credit is not just a cause for self-esteem
One of the main reasons why a good credit is beneficial is favorable interest rates. Low interest rates on loans offered to people that appear to be low credit risk as it is believed that a person with good credit will pay off the loan on time. People with bad credit will generally experience much higher interest rates that the lender wants to protect in case the borrower defaults on the loan.
If people want to apply for credit cards and credit lines for themselves or their businesses, good credit is crucial. Poor credit can lead to a refusal of an application, or to a very high interest rate on completed balances. People with good credit scores can also generally get higher balance limits, allowing for greater flexibility with a line of credit that can be extremely useful.
They can also be rewarded with an annual fee waiver and other perks
Even if people are not interested in being able to access credit lines, good credit is still important. Utilities such as phone and power companies usually check credit before opening new accounts and they can deny an account or require a very high sales if credit check reveals a bad credit history. Landlords are also usually inclined to refuse rental applications from people with bad credit, seeing them as potentially risky tenants.
A number of things can affect a person’s credit record, making it important to secure one’s credit record by continually ordering credit reports to check for suspicious activity and by doing things that will improve an overall credit record. A credit simulator program can be used to see how different activities will change a credit score. For example, paying down balances will generally cause a credit score to rise, while missing payments or borrowing will cause a fall. By managing money wisely, one can ensure that they have good credit to call on when they need it.