The Importance of Credit
In this electronic age we live in, establishing and building good credit is more important than ever. Our lives are recorded in a vast fabric of data that can be checked instantly by entities that want to sell things to us, hire us, or perform services for us. We are ranked on a scale of 300 to 850, with the higher the score the better. Anything over 680 is considered good to excellent. You will be able to get a loan at the best rate possible. Anything under 620 means your credit is not that good, and you will have to pay high rates of interest on any loan or credit card.
Most of us have an electronic money trail, even if we only bought a savings bond in grade school or sacked groceries for a summer at the minimum wage. Every time we try to buy a car on credit, apply for a new job, rent an apartment, or submit an application for a school loan, our credit history is examined.
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If we don’t have a history, or if our history is full of late payments and bounced checks, we may not be able to buy the things we want and need unless we pay cash. Sometimes, potential employers will not hire someone with a bad credit history, thinking that person is unreliable. At other times, insurance companies will charge more for a policy if a person has bad credit, or banks will charge very high interest for house or car loans—if they approve of any loan at all.
Our credit scores follow us everywhere, opening doors to better paying jobs and allowing us to pay less for mortgages or car loans. Covering unexpected expenses is easier, too, because we can get personal loans more quickly and cheaper. Good credit smoothes the bumps over our entire lives, allowing us to live more comfortable, less stressful lives. It is an attribute that is worth working for—and worth keeping if we already have it. A good credit history is also something that we can achieve with thought and planning, even if our credit history is currently poor.
Having no credit history is nearly as inconvenient as having bad credit history. Having no credit history and trying to get a loan is nearly as difficult as finding that first job if you don’t have any experience. Businesses want to deal with known outcomes. They prefer not to gamble on someone who has not shown that they will pay a loan in a dependable fashion. In order to get past this hurdle to economic viability, it is important to begin to establish good credit as soon as possible.
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