A good credit score (FICO scores 670 and above) is essential to qualify for the lowest mortgage rates, snag a stellar credit card bonus and sometimes even land your dream job. Since your credit influences so many major life decisions, it’s important to build credit early and consistently.
You can build credit in any number of ways, including opening a credit card, paying eligible bills on time with *Experian Boost® and getting credit for monthly rent payments.
Knowing why credit is so important can help motivate you to work on building a good credit score. Below, we outline a few major benefits of building credit, plus ways you can build a good score.
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Why is building credit important?
Building credit may not be on your radar, but it should. Lenders check your credit history any time you want to open a new financial product, like a loan or credit card. They may only approve applicants who meet certain credit requirements, such as having a good or excellent credit score.
If you don’t have good credit, you may miss out on securing a low interest rate on a mortgage, personal loan or credit card, and wind up paying more during the term of your loan. But if you establish a good credit score, you can save money on interest payments and use the savings to invest in your future.
Credit also influences more than your ability to qualify for new financial products. Some employers may even check your credit report for potential red flags, like delinquencies or accounts that are in collections, before extending a job offer. The results of their credit inquiry may have an affect on whether they hire you or not.
Therefore, it’s important to build credit so you present your finances in the best possible way, whether it’s to a lender or prospective employer. Good credit gives you more freedom to qualify for the best financial products that can help you save money and achieve your goals.