Your credit score and credit history have a big impact on your life. You might already know that credit scores impact your ability to get a loan and how much it will cost you. But did you know there are other things like employment, insurance, and bills that can affect your credit score.
How Does Your Credit Score Impact Your Life?
Credit scores play a huge role in your financial life. They help lenders determine whether you are a good risk. Your credit score can determine whether or not you’re approved for a loan. It can also impact your interest rates once you do get a loan. This can make your debt more or less expensive for you all based on a simple number, your credit score. Additionally, credit score doesn’t solely impact your financial life, it can also impact the way someone views you as a person.
Whether You Can Get A Place To Live
Landlords, property managers, and rental agencies typically will run a credit check to approve you for renting. They will look out for a pattern of missed payments or anything else that’s negative on your credit report that could indicate you wouldn’t pay your rent. If you had bad credit they may require a co-signer, a larger deposit, or deny your application altogether. With the current housing market, and how much competition there is, you wouldn’t want this to happen to you.
Whether You Can Afford A Mortgage
Mortgage lenders can review your credit score from the three major credit bureaus as part of the application process. A mortgage loan is much larger than an auto loan or a student loan, meaning your credit score is more impactful. The score you need to qualify for a mortgage loan varies by the lender, loan type, and general housing credit market. Obviously, the higher your credit score the more the chances are that you’ll receive a loan and get a low interest rate on it too! For example, if you are approved for a $100,000 mortgage at 3.92% interest rate, for 30 years the monthly payments would be $473 and a total cost of $170, 213. On the other hand, borrowing the same amount at 4.92% interest for 30 years is a payment of $532 per month which will increase the cost by $20,000.
Purchasing A Vehicle
Your credit score influences the auto loan available to you. In similarity to a mortgage, the better your credit score, the more approval you’ll get for an auto loan. If you have an excellent credit score, you are likely to qualify for the best loan terms available to you. If you have poor credit and obtain a loan that has high interest, it will increase the payments on your car.
Access To A Wide Range Of Necessities
You may have noticed a trend, your credit comes into play when you are seeking out a service or buying something new.
Personal Loans
Whether it’s a loan in Los Angeles, California or loans in Springfield, MO, your credit score will determine if someone will be willing to lend you the money. Depending on the circumstances in your life, you may need a personal loan for an emergency and want to have access to that at all times. You never know what life will throw at you and having a good credit score will give you the cushion to take out a loan if you need.
Student Loans
Federal student loans don’t require a credit check, however, if you ever need a private student loan it will require one. If your credit isn’t the best you may end up paying higher rates on your education.
Credit Cards
When you apply for a new credit card, the issuer will review your credit score to see if you are eligible for another card along with the terms you should receive. Qualifications vary by the issuer and card type. Cards with low APR usually require a high credit score. In fact, you can get much better deals with a high credit score and could get a high value credit card.
