The average credit score varies significantly from state to state. Those living in Minnesota enjoy the highest at 709, while those living in Mississippi have some of the country’s lowest with an average of 647.
You may ask yourself, why is a credit score important? Most people tell you that having a good score can help you secure favorable loan terms. But your credit score influences so much more than that.
Here are five ways your credit score can affect your life.
1. Living Options
Whether your renting or looking to purchase, a strong credit score will help you secure your most desired housing. Mortgage lenders will pull your credit score when determining your application for a mortgage. Landlords will also pull your credit when considering your tenant application.
Have a poor credit score, and you may get turned down as a tenant for the most desirable rental options. Your poor credit score can also prevent you from getting approved for a large enough mortgage to buy your dream home.
2. Employment Applications
Having a good credit score is important because many employers these days will run a credit check for job applicants. While employers pull your credit report and not your specific score, if you’re score is low, it means your report has some questionable things in it.
Employers may think twice about hiring someone who hasn’t demonstrated financial responsibility. They may feel that your debt is too high for the salary they are offering. Or the position could be for a financial position, and your less than stellar credit report shows you lack the skills for the job.
3. Loan Terms
This is the one benefit that everyone knows. The better your score and report are, the more favorable terms you can get.
Lenders want to see that they will get their money back. A strong credit report shows that you consistently repay your debts.
4. Utility Applications
Some utility companies will run a credit check and check for their ideal credit score before approving your services application. This also includes cell phone companies.
You may find that your poor credit profile disqualifies you from the best promotional offers. If your score is especially poor, the company may require you to pay a deposit before services are rendered.
5. Car Insurance Rates
Many people don’t realize it, but your credit score and report can affect your car insurance rates. Those with lower scores will be asked to pay more than those with excellent credit scores. This can result in hundreds of dollars in fees saved for improving and maintaining an excellent credit score.
Sarah Minter from Money Trumpet says that one of the best ways to improve your credit score is to not use more than 30% of your available credit
Why Is a Credit Score Important? Now You Know
You should no longer be asking, why is a credit score important? As you can see, having a high credit score means that your life will be more affordable and more comfortable.
If your score isn’t great, focus on reducing your spending and paying off your debts. This will improve your payment history and reduce your debt to income ratio.
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