A credit score is a three-digit numerical number between the range of 300-850. It is an indicator of the financial health of a consumer. Financial institutions determine the credit score of a consumer on the basis of the following criteria:
- The total amount of debt accrued by the consumer
- Timely repayments of debt
- Number of existing accounts
A higher or good credit score indicates that the consumer is trustworthy and can be lent more credit. A lower or bad credit score of the borrower indicates a greater risk for the lender. A bad credit score means the borrower may not be able to make timely payments and may also default.
Now that we know what a credit score is, let us see why it is important to have a good credit score.
Get Loan on Low-Interest Rates
- Credit score determines the interest rate on which you receive personal loans such as student loans. As mentioned before, good credit score indicates the creditworthiness of the borrower. Getting loans on low-interest rates will save you a good amount of money in the repayment of loans.
You can use this money to pay off the original loan or for other expenses. You will be eligible for receiving loans if you have a bad credit score, but on very high interest rates. Repaying those loans will cost you a fortune.
Rental Companies Prefer Tenants with High Credit Score
- Rental management companies and landlords review credit scores to gauge the financial worthiness of a person before renting them a home. If your credit history shows eviction due to non-repayment of rent or any outstanding rental balance, you will be in hot water. Your chances of renting a new apartment will reduce drastically.
Rental companies prefer tenants with higher credit scores. If you have been faced with evictions or foreclosures, you need to get your credit straight now. Hiring a reliable company to repair your credit is a time and tested method to avoid the repercussions of having bad credit.
- If you wish to get your credit fixed, contact Credit Repair Today and let them help you with your credit woes.
Save Money On Security Deposits
- Utility providers review your credit score and credit history before offering their services. They do this to evaluate your financial standing. If you have a bad credit score, they will ask you to submit a security deposit before accessing the service. The amount of security deposits varies between $100 to $200.
Submitting these deposits and reclaiming them when you relocate can be a huge hassle to deal with. If you have a good credit score, you will not have to go through the drill of submitting security deposits.
Enables You to Borrow More Money
- A good credit score means that you will receive credit card loans on lower interest rates, but that’s not all. A higher credit score will also allow you to borrow more money. You will get approved for higher loan limits. Hence you can purchase your dream home or send your kid to university without having to worry about money.
Banks grant this favor to borrowers having good credit scores because their credit history reflects their creditworthiness.