The Importance of a Good Credit Score

Created: 2019-10-08 08:50:00

Your credit score plays the most critical role in your financial portfolio. This is what lenders use to determine whether you are a reliable candidate to extend a line of credit to. If you have a low credit score, lenders will view you as a high-risk borrower and either apply a high interest rate to your loan or reject your application. There are several reasons why it’s important to have a good credit score, here are some of them.

More Financial Access

People with good credit have better access to financial resources. Do you have a business idea that you are finding difficult to get off the ground because you can’t afford to invest in it? Or do you want to purchase your first home but can’t raise enough money for a deposit? It is times like this when a loan would be of great benefit to you.

Financial Stability

Although it is not the best idea to rely on credit, the bottom line is that when you have a good score, you will know you will always have money available to you when you need it. People with bad credit are forced to rely on payday loans or short-term loans to make ends meet.

Low Interest Rates

When you have good credit, you can borrow high amounts of money with a low interest rate. The lower the interest rate, the faster you will be able to pay off the debt.

More Negotiating Power

Having good credit gives you the power to negotiate, lenders are more willing to accept your terms and conditions because they know that you will probably be able to get what you are asking for at another financial institution.

Final Thought

The good news is that if you have got bad credit there are things you can do to improve it. It will take some time to restore your score, but you will get there in the end if you persevere.

Warning: Late repayments can cause you serious money problems. For help, go to moneyadviceservice.org.uk