Why Credit is Important For Your Future

We all know, in some capacity, that credit matters. It’s a number meant to determine our financial future and allow us to participate in the economy that often gets forgotten about or ignored, but it’s important to understand it before it’s too late.

Here’s a rundown of the few key reasons why you need a credit score:

  • If you want to open new lines of credit, like a car loan, you need a good credit score to get approved, especially if you want a low interest rate.
  • Applying for an apartment by yourself? You need good credit, otherwise you need to find someone else who does to co-sign the lease for you, which doesn’t feel great when you’ve reached your mid-20s.
  • If you want the new iPhone and you’re looking to finance, your carrier will run your credit to check if you qualify and if you require large deposit to secure it.
  • Utilities companies run credit reports, too!

Not having a good credit score – or having no credit at all – means you generally have to pay more upfront for services, which isn’t always an option. Signing up for your utilities provider and then finding out you have to pay a $200 deposit before you can get electricity is a bummer.

Your credit score and report are the only concrete pieces of evidence that show whether or not you’re a financially responsible person. You don’t usually get to plead your case, and even if you do, at the end of the day lenders have to protect themselves.

Unfortunately, getting a credit score means you need to dabble in a little bit of debt, but take your time, start slow, and know that building a good credit score does take time (age of oldest account is one of the factors that calculates them). Pay everything on time, don’t pay late, keep your accounts open, and check your reports yearly.