- Posted March 30, 2022
Why Credit is Critical to Your Financial Health
Have you ever wondered why everyone seems to be making such a big deal about credit scores? As it turns out, having a bad credit score can indicate a lot about your financial state and personality. It can also limit you financially in the future if you’re not careful. Here are a few reasons why having good credit is critical to your financial health according to a certified financial planner.
Show Companies You’re Responsible
First off, having a good credit score will show companies that you’re financially responsible. Not only does having a good credit score indicate that you can budget to pay for your credit purchases, but it also shows that you are responsible in managing your credit bills and can make payments on time. If you are trying to get hired by a company, they might ask to see your credit score to have some insight about these different responsibility factors. A good credit score is part of a sound financial plan.
Get Lower Interest Rates
Next, having good credit is critical to getting lower interest rates states our certified financial planner. This is particularly important if you are in the market to buy a new home. When you’re applying for mortgages or loans to be able to afford buying a home, the banks and lenders will take a close look at your credit scores. In this instance, your credit score will indicate to them if you’ll be able to keep up with mortgage or loan payments. Banks and lenders don’t want to risk their money being wasted. So, if your credit score is bad enough, you may be shut out of a loan entirely. For this reason, it is important to improve your credit when you’re preparing to buy a home.
Make Big Purchases
In addition to buying a home, having good credit will help you to make other big purchases. If you need financing to buy a new car, to pay for a wedding, or to manage tuition payments, your credit will be a key element that will help you to get that financing. Before you’re permitted to make these big purchases with payment plans, your credit will be checked to determine whether or not you’ll be able to keep up with future payments in a timely manner. Having bad credit can be a big roadblock when it comes to paying for important purchases such as these. Talk to one of our certified financial planners for advice on if your next big purchase makes sense.
So, if you’re looking to get a credit card or wanting to improve your credit score, remember the reasons that have been discussed in this article. Having good, high credit can help you to look more responsible to companies, get lower interest rates, and make big purchases with financing. Once you see all of the doors that will be opened to you, you’ll never regret having good credit.
Check out this article on situations that call for a financial advisor!
Contact Tenpath Financial Group for certified financial planning services.