In this game called Life, one number seems to rule over all of us: Our credit score rating. It does not matter if you are 16 or 63, you are most likely dependent on your credit score for a variety of different reasons.
Building the best credit score possible is the key to financial success and freedom, while a bad credit score only adds more troubles to your financial situation. So if you haven’t given much though to your own credit score rating, here are three major reasons why you should start caring about credit:
#1. The best credit score often gets the job.
Not every potential employer runs a credit check prior to offering a job, but many do, especially if the job you’re going after is involved with the government.
For example, the government may have an opening for an IT/computer engineer. In order to do that job, the person must have a Top Secret clearance level, which can be gained through a background check of one’s previous ten years. If there are bankruptcies, bad standings with credit card companies or a bad credit score, there is a huge potential that the person may not receive the job.
Furthermore, other companies outside of the government are looking at credit scores to determine who is the right candidate. A bad credit score speaks negatively on your behalf — basically, a bad credit score says to employers that you are irresponsible, lazy and untrustworthy, whether or not that’s really accurate.
#2. A bad credit score means you’ll pay more for everything.
A majority of the population borrows money at some point and time; this can be for a car purchase, home loan, student loan or even a business/personal loan. Initially, your credit score rating affects whether or not you even qualify for the loan. If you have a bad credit score, you will most likely not qualify for majority of loans. However, even if you have an average or good credit score, as opposed to an excellent credit score, you can still end up paying more through a higher interest rate.
For example, if you have average/good credit and qualify for a 6% interest rate on a $200,000 home, you would end up paying almost $200 more a month and an extra $100,000 in interest over the course of a 30-year loan, as opposed to a borrower with what is considered the best credit score who qualifies for 3.79% APR.
#3. Your credit score rating affects where you live.
Even if you do not want to buy a house any time soon, your credit score rating still affects where you live. Whether it is an apartment or a rental home, landlords run potential renters’ credit scores to determine if they’re good candidates.
A landlord does not want a renter with a bad credit score because it means the possibility of late or missed rent payments. Some places will allow you to rent even if you don’t have the best credit score, but renting an apartment with bad credit means it’s probably going to be more expensive or not the most desirable place to live.
When it comes to your quality of life, your credit score does a lot of the talking. Maintaining an excellent credit score rating means better employment opportunities, better loan interest rates and the ease of borrowing money.
Don’t let a bad credit score ruin your life. Instead, take charge of your bill and loan payments and pay them early or on time. Your credit score does not stay the same forever, so stay consistent with payments and avoid situations that will lower your credit score.
This article is part of the Go Banking Rates Financial Literacy Movement, helping Americans get smarter and grow richer. Take our Perfect Credit Score Quiz to test how knowledgeable you are!