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January 23, 2014

Why Your Credit Score is Important

Your credit score is one of the most important things that you will ever have during your life. A good credit score grants you access to loans at low interest rates, insurance policies at lower rates and makes it easier to get a job.

Your Credit Score Is A Responsibility Score

Your credit score is seen as a ranking of your ability to be responsible. People who have low credit scores generally have trouble holding down a job or making other difficult decisions. Although your credit score can’t determine if you are a good driver or a whether you can pay back a loan, there is a casual link between those with good credit scores and those who are responsible in all aspects of their lives.

Credit Issues Don’t Go Away Quickly

Everything that you do is recorded and kept on record for at least seven years. Therefore, you have to think long and hard before you do anything regarding your finances.

Defaulting on student loans, filing for bankruptcy or failing to make a credit card payment could haunt you for many years to come. If you file for Chapter 7 bankruptcy, you will have to explain that bankruptcy to creditors for the next decade.

What this means is that it is critical that you earn and maintain a good credit score. If you don’t, you could spend years paying too much for a loan or waiting to buy your first house. It could also keep you out of a job as those with low credit scores may have a reason to steal company funds or file false insurance claims.

A Good Credit Score Can Earn You Special Perks From Retailers

When you buy a big ticket item, those with a good credit score could be rewarded with no payments for up to a year or longer. This gives you the flexibility to buy what you want without having to pay for it right away. For example, you could buy a $1,000 couch, spend the next 11 months saving up the money to pay for that couch and make a lump sum payment without owing any interest. If you do have to make minimum payments, you could still be eligible for zero percent interest on any purchase that you make for up to 18 months.

Having a good credit score means a lot. It means that you are trustworthy and responsible. If you have a low credit score, you may spend years of your life trying to climb out of the hole that you have created for yourself. Therefore, make sure that you pay your bills on time and only take out loans that you can afford to repay in a timely manner.

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