Today’s economy increasingly relies on credit to finance purchases – from something as simple as lunch to a complicated mortgage.
This reliance on credit has made having a strong credit score – a three-digit number that represents the likelihood of you paying your bills on time, an important financial tool. They can determine where you live, whether you need to make deposits to set up utilities, get a job offer, even the type of cell phone plan you’re offered. Here are four reasons why having a solid credit score is important.
Easier credit approval
People with good credit scores are more likely to have an easier time getting their credit applications approved. Lenders are comfortable lending money to these individuals because they’re financially trustworthy.
Better loan terms and options
Applicants with high credit scores have access to more loan and credit card options and better terms, including the ability to borrow larger loan amounts. This can make finding financing for large purchases, like a car or new home, easier.
Lower interest rates
Interest rates are the cost you pay for borrowing money. Lenders use your credit score to determine the interest rate you’ll qualify for. What does this matter? The interest rate is essentially the cost you’ll pay for borrowing money. If you have a high credit score, the more likely you’ll qualify for the best interest rates and lower finance charges on credit cards. The difference in interest rates or finance charges can translate into thousands of dollars saved over the life of your loan.
Insurance discounts
Some auto and home insurance companies may offer discounts on premiums for people with higher credit scores. Your credit score is only a portion of the factors that insurance underwriters use to determine your premiums, and don’t worry—lower credit scores won’t disqualify you from being insured or have your policy canceled.
There’s real power in having a solid credit score. That’s why you shouldn’t delay checking your credit history and fixing any errors. Getting your credit score in shape puts you in the best possible financial situation for getting a mortgage.
When you’re ready to jump into the home buying process, we’re ready and excited to help! Visit us online to learn more about our new home communities throughout the Bay Area. Our experienced team will guide you through the buying process and help you find the right home for your family.