Credit score has been a common topic of conversation over recent years. However, many do not understand exactly how credit can impact their life. The better your credit, the more likely you’re able to finance at a lower rate. Your credit score affects everything from financing or buying a car to buying a house. Here’s a look at how a good score can affect your life.
Benefits of Good Credit
- Receive better rates: According to USAA.com, your credit score can affect auto insurance rates depending on where you live, what type of car you own, and how much coverage you need. You could be eligible for better rates on your car if you maintain a strong credit rating.
- Buy or Lease a Car: Auto-financing can be significantly easier with stronger credit. When making a major purchase like a car, you may need to have the ability to receive financing. A poor credit history could jeopardize your chances of qualifying for financing or getting a good rate.
Hazards of Bad Credit
- You may have problems renting a house or an apartment: Looking for a house or apartment to rent? You may discover that your credit score is reviewed as part of the screening process. Poor credit history may negatively impact your chances.
- It could affect job prospects: Some employers conduct credit checks during the hiring process. LearnVest.com notes that for highly competitive positions, a bad credit score could affect your chances for employment.
- You may have to pay higher down payments: Unfortunately, if lenders deem you a credit risk, they may require you to put more money down on home loans or when financing your vehicle.
- You may find it tough to obtain preapproval for purchases: When applying for a mortgage preapproval, the lender reviews your credit history. With poor credit, you could have a tougher time gaining preapproval. And according to SFGate.com, poor credit might preclude you from preapproval entirely.
Does using cash or debit hurt your credit?
While using cash exclusively can help you avoid debt, it also prevents you from building a credit history. Similarly, debit cards pose the same dilemma. In both cases, you’re not demonstrating the ability to borrow money and pay it back responsibly, because doing so isn’t reflected in your credit history.
What’s your credit score?
If you’re curious about your own FICO score, we’re here to help. On July 19th, all Ally Auto customers will be able to view their FICO score for free by going to the “My Vehicles” page of our website and clicking “view my FICO score”. Knowing your FICO score and understanding its impacts can help you prepare for the auto finance process. Find out more at Ally Wallet Wise for helpful tips.
Do you have any surprising ways in which your credit has affected your life? Share with us in the comments below.