Personal credit plays a crucial role in almost every aspect of our lives. It is crucial to maintain a good credit score as it determines the level of trustworthiness that creditors and lenders have in an individual. Many of us make a mistake or two that negatively affects our credit. Rebuilding credit is possible, but the best protection is to protect your credit like you protect your name. Your personal credit score is essentially your money management reputation score. We will discuss reasons why personal credit and protecting it is critical.
One of the primary reasons personal credit is important is it plays a significant role in determining an individual’s eligibility for loans and credit cards. Lenders and creditors use credit scores to gauge an individual’s ability to pay debts on time. Therefore, maintaining a good credit score will increase an individual’s chances of being approved for loans and credit cards. As an adult, it is essential to have the ability to secure loans for large purchases you’d like to make. Credit cards are for small purchases. “Small” is relative, but let’s say a small purchase is something we can pay back in 3-4 months.
Moreover, individuals with good credit scores are likely to qualify for loans and credit cards with better terms and conditions, such as lower interest rates and higher credit limits. Lower rates can save individuals a lot of money in the long run and allow them to take advantage of financial opportunities. As mentioned in the previous paragraph, we should repay small purchases in 3-4 months because of the high-interest rates of credit cards. A benefit of lower interest rates is stretching the repayment to 5 or 6 months while paying the same amount in interest.
Personal credit also affects the cost of insurance premiums. Insurance companies use credit scores to determine an individual’s likelihood of filing claims and defaulting on premiums. Therefore, individuals with good credit scores are more likely to receive lower insurance premiums than those with poor credit scores. High insurance premiums are an often-overlooked repercussion of poor credit. In the scenario of insuring a home, the difference can be thousands of dollars over the course of a year.
Believe it or not, personal credit can also affect job opportunities. Many employers check credit scores as part of their hiring process. Jobs in the finance industry, where individuals manage finances and handle money are likely to do a credit check. Therefore, individuals with good credit scores may have an advantage over those with poor credit scores when securing job opportunities. The last thing we want is our credit score holding us back from a job that can assist in cleaning it up.
Personal credit is also important when it comes to housing options. Landlords often check credit scores before renting out apartments or homes to tenants. Landlords want to ensure tenants pay rent on time and don’t default on payments. Individuals with good credit scores have more housing options and may be able to negotiate better rental terms than those with poor credit scores.
Finally, personal credit can also affect business opportunities. Entrepreneurs who want to start a business require obtaining loans or credit lines to fund ventures. A good personal credit score increases the chances of being approved for business loans and credit lines, which is a necessity when starting and growing a business.
In closing, personal credit is important for many reasons. Maintaining a good credit score opens up opportunities. Our credit score is either the gate or gateway to everything we want to accomplish. Maintaining a good credit score to ensure financial stability and security is imperative. We should check our credit often. We must protect it to the best of our ability.
Food for thought. You do the dishes!
