We hear a lot about credit.
Building good credit is an essential part of your financial planning. In fact, good credit is key to your future success with money.
1. Save Money on Loans
First of all, good credit means you save money on your loans. Whether you’re buying a car or a house, your good credit means that you get a lower interest rate.
The lower your interest rate, the less you pay in charges over the life of your loan. When you add up all your interest savings, that’s thousands of dollars during your life.
Can you imagine what you could accomplish with that money if you weren’t just paying it straight into someone else’s pocket?
Rather than paying interest, you can instead invest that money for your future. Build your retirement portfolio. Invest. Pay down debt. There’s a lot you can do for your financial health when you aren’t paying high interest rates.
2. Access to More Financial Opportunities
When you have good credit, you have access to more financial opportunities. If you need a little extra money in a pinch, you are more likely to get it when you have a desirable credit situation.
From getting approved for the rental you want to getting a good deal on your cell phone services, good credit opens financial doors that might be closed otherwise.
Your dream home might never become a reality without a good credit score. If you need money in a pinch, you might not be able to get it because of your credit situation. On the other hand, you have greater access resources when your credit is solid.
In fact, when I had surgery on my wrist, my credit situation allowed me a good repayment plan. I owed the hospital enough that I didn’t want to pay in a lump sum. I asked about a payment plan and they ran my credit. I ended up with a 12-month, interest-free plan.
The reality is that many people who might need a plan like that more than me wouldn’t have access. Their credit would mean interest charges.
Your good credit means more chances to negotiate and save money overall. You get access to liquidity that those with poor credit don’t end up with.
3. Access to Better Jobs
It’s true that employers aren’t supposed to look at your credit score. However, they can look at a version of your credit history in some states. If there are red flags in your credit history, you might be passed over for certain jobs.
Your credit can be part of a background check. If you have poor credit, there might be worries about the risk you pose for embezzling or for being susceptible to bribery. On top of that, in some financial jobs, they like to know that you have good credit.
When you manage your credit, you leave yourself open for more employment opportunities. You won’t always be passed over because of your credit history, but you don’t want it to hold you back.
4. Save Money on Insurance
In some states, insurance issuers are allowed to check your credit when giving you premium quotes. Over your lifetime, it can add up to thousands of dollars.
You might miss out on discounts and other savings if you have poor credit. Pay attention to your credit, and you can get the best insurance deals, and put the savings toward building your financial future. It make a huge difference down the road.
5. Set the Stage for Success in Other Areas
While a good credit situation isn’t the be-all-and-end-all of financial success, the reality is that the skills you develop while building your credit can result in success in other areas of your life.
Building a good credit history requires discipline and planning. Applying these skills to other parts of your life can lead to success later. Your good money management and credit practices can translate to business success. You can also use discipline and planning to succeed
You can also use discipline and planning to succeed in your education and relationships. Care and attention to detail, and an effort to be conscientious can pay off with more than just money. Develop and practice skills related to your credit, and you might be surprised at what else benefits.