Though credit cards designed to be used at individual businesses have been around since the 1920s, the first universal credit card didn’t come around until 1950.
Over the last 70 years, however, credit has become increasingly more important. And today, good credit is an absolutely vital ingredient to a successful life.
You probably know that your credit score impacts many aspects of your life, but you may not know exactly what those are. Why is it important to have good credit?
If you find yourself asking this question, you’re in the right place! Read on to learn why you should never neglect the health of your credit score.
What is a Good Credit Score?
Before we jump into why good credit is important, let’s take a moment to discuss what a good credit score actually is. There are several different scoring models out there, but the most common is the FICO Score, which grades you on a score of 300 to 850.
A good credit score is considered to be between the ranges of 670 to 739. Your score is considered very good if it’s between 740 and 799. And if you have an exceptional credit score, it will be above 800.
A wide variety of things affect your credit score, from payment history to the number of credit accounts you have.
If your score isn’t great, you may be thinking, does debt consolidation affect credit? Learn more about debt consolidation and how it affects your credit score by visiting the linked website.
Why is it Important to Have Good Credit?
Now that we’ve gone over what makes a good credit score, it’s time to talk about why it’s important. How can a good credit score benefit your life? The perks of good credit are as follows:
- Lower interest rates
- Better loan terms and availability
- Lower security deposits
- More housing options
- Better credit card perks
- Lower insurance premiums
As you can see, maintaining a good credit score can save you money in quite a few different areas of your life.
If you make a large purchase, such as a car or a house, you can save thousands. But even smaller expenses, like the security deposit required by your utility company, will be considerably lower if not waived entirely.
A good to exceptional credit score can even open more housing options to you, as landlords are more likely to rent property to those they feel are most likely to pay rent on time.
Time to Get Started Improving Your Credit Score
Now that you no longer have to ask, why is it important to have good credit, you can get to work improving your credit score.
There are tons of tools available online and via apps that will allow you to routinely check your credit score without lowering it. Many of these will also give you tips on what you can improve upon.
Be patient with yourself. If your credit score is low, it didn’t get that way overnight. Bringing it up to a good score will take time as well.
Looking for more tips on improving your financial life? Be sure to check out our blog!