3 Reasons Why Good Credit Is So Important

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

From the moment we enter school as young children we're taught that numbers are important, especially when it comes to our grades - final exams, SATs, mandated state exams, and then finally our college GPA. But what people often fail to stress the importance of is how numbers affect your life after school, and specifically, how they impact you financially.

This is where credit comes in. We all have a credit score (which is determined by factors such as payment history, the amount of debts owed and the length of credit history), and in order to achieve certain things and make certain purchases, the number associated with our name needs to be one that indicates that we are financially responsible. Below, we're breaking down some of the specific reasons why having the right credit score is so important:

1. It affects interest rates. Hoping to become a homeowner? Not only does a poor credit score hurt your chances of being issued a mortgage, but it also makes it more likely that you'll have a higher interest rate if you're approved. Essentially, that means you put yourself at risk for having a higher monthly payment.
2. It can affect your employment. Depending on the field you are trying to enter, some employers may complete a credit check during the hiring process. Similarly, if you are being considered for a raise or a high-level promotion, some may choose to check your credit score to see just how financially responsible you are.
3. It affects homeowner expenses. Believe it or not, companies that provide service to homeowners and/or renters (such as cable companies and electric companies) often check your credit to learn about your financial history. Although these companies aren't lending you money directly, some see it as lending you a service each month, which makes it important for them to be able to trust that you will pay for what was provided.

While there are ways to bounce back from having a poor credit score, it's also important to realize that your history will follow you - that's why you need to work on establishing good credit as soon as possible!

Have questions about how to do so? Contact the advisors here at American Investment Planners LLC, and connect with us on social media/review our blog regularly - we update our profiles with financial tips like these as often as we can!