Why Credit Matters

Growing up, many people aren’t exposed to the concept of credit. Often, our only perception is that it’s something to be avoided. Today, the script is beginning to change, and we’re here to help you understand how embracing the power of credit can impact your life.

Many areas of our finances are affected by credit; a big one is your ability to get approved for more credit. Whether it’s a car loan, a mortgage, or even a credit card, your credit history can dictate whether or not you are approved, as well as the interest rate you receive if approved. Typically, the higher your score, the lower your interest rate, and vice versa. This inverse relationship rewards positive payment history with a decreased borrowing expense.

Other areas we may not expect our credit to be affected include insurance rates, cell phone bills, needing a security deposit on a rental property, and more. The story our credit tells paints a picture of how much risk a lender may assume by loaning money to us. Other stakeholders may also seek out this information to determine whether you will pay your rent or bills on time and more. Life comes with risks, and a credit report can give a more complete financial picture to mitigate risks for both the borrower and the lender.

If we shift from the belief that credit is bad and to understanding how it can be used for good, we can set ourselves up for financial progress.