When you think about your financial future, do you ever wonder how your credit score will play a role in your everyday life?
You may not realize just how vital your credit score is to your financial freedom. Yet, your credit score is like a financial fingerprint that gives lenders a glimpse into how responsible you are with your money. Your credit score could be the difference between financial freedom and a financial sinkhole.
Here are five ways your credit score can affect your financial freedom now as well as in the future:
1. Your Credit Score Can Save or Cost You Money
When you apply for a loan, your credit score can affect the lender’s decision to grant you credit. But did you also know that your credit score can affect how much credit the lender grants you and at what interest rate?
A low credit score sends a red flag to lenders, stating that you might be a risky investment. Because of this red flag, lenders will be more likely to charge you a higher interest rate.
According to a FICO report, the difference between a credit score of 620 and 760 could be tens of thousands of dollars. For example, if you have a credit score of 760, you could pay $211 less each month in interest as compared to someone with a credit score of 630. That’s a savings of $75,960 throughout the life of the loan.
2. Your Credit Score Can Affect Your Relationships
Did you know that your credit score could make or break your relationship? In a survey reported in US News, nine out of 10 people said financial responsibility was an important factor when considering possible partners. The study also said that three in 10 women and two in 10 men said they wouldn’t marry a person with a poor credit score.
When you get married, you take on someone else’s debt, credit score, and financial history. If you end up with someone who has a terrible credit score, it could affect your ability to buy a house, get a credit card, and obtain financial stability.
Don’t let your credit score get in the way of a healthy relationship.
3. Your Credit Score Can Affect Your Emergency Fund
We all know that when it rains, it pours. And sometimes you may need to tap into your emergency fund for medical bills, car repairs, or to help a loved one in need. If you have bad credit, your access to extra funds will be limited. This can make you more vulnerable during emergencies.
4. Your Credit Score Can Affect Your Career
Did you know that more and more employers are checking credit scores for their employees as well as job applicants?
A good credit score can tell an employer if you’re trustworthy and responsible.
A bad credit score might tell an employer that you’re more inclined to theft and irresponsibility, especially with the company’s finances.
So, whether you like it or not, your credit score could affect your ability to get your dream job.
5. Your Credit Score May Affect Your Life Improvement
First off, a bad credit score can affect your stress levels. It takes away your financial freedom, which can affect your emotional and physical freedom as well. You may stress about a debt collector trying to contact you, the humiliation of a credit card being declined, or having to go without necessary things because you just don’t have the money to buy them.
A bad credit score could also affect your ability to improve your life by getting a new job, going to school for higher education, or buying a car or house. A bad credit score could hold you back from achieving a better life for yourself and your family.
Don’t let a bad credit score stop you from achieving your dreams. A bad credit score can drag you down, but a good credit score can set you free!
The best time to start improving your credit score is today. Create a budget via RentPlus Money and learn financial principles via FinStrong and you’ll be on your way to a better, brighter financial future.