Why Good Credit is Crucial For Reasons You Might Not Expect

Society is becoming increasingly dependent on using credit to make purchases and decisions. Nowadays, having a good credit score is beneficial for more than just the obvious cases of getting a credit card or a loan. More and more businesses are making the case that you must have good credit before they can offer their products or services to you. Below are some of the biggest reasons why it's crucial to have good credit, especially in situations where it's not what you would normally expect.

1. Buying Your Home

When it comes to where you live, having good credit is important. Mortgage lenders want to know that you won’t default on your mortgage. If you don’t have good credit, the lender will consider it risky to give you a mortgage loan. This could result in a higher cost of borrowing; or worse, a denial of the loan.

2. Renting Your Home

Don’t think that just because you’re not looking to purchase a new home, that your credit won’t be called into question in other situations. Your credit is also used for rental decisions, too. Landlords consider your lease as a loan. You’re being loaned a place to live and the landlord wants to know you’ll pay back this loan. If you don't have good credit, you can get denied as a tenant for an apartment or home.

3. Purchasing or Leasing a Vehicle

Unless you have the cash to purchase a car, you’ll have to get a loan. Your credit not only affects whether or not you qualify for a loan, but also the amount and interest rate of the loan. Generally, loan applicants with good credit qualify for larger loan amounts with lower interest .

4. Getting a Job

Many employers conduct credit checks as a part of the hiring process. If you haven’t demonstrated financial responsibility, a prospective employer might be hesitant to hire you. For example, the employer might believe your level of debt is too high
for the salary offered.

5. Starting a Business

Many people have dreams of starting their own business. Most business startups require a significant amount of cash that you might not have available. In that case, you’ll need to obtain a small business loan. Among other things, you need to have good credit to qualify for the business loan. When people are wanting to start a business, but their credit score is poor and they don't have any tangible assets to use as collateral, it makes it very risky for the lender to loan them money, since there is nothing to repossess, in case they fail to make payments on the loan.

6. Qualifying for Utility Services

It might be surprising to some to learn that a credit score check is required when signing up for utility services, such as electrical services. An electric company can argue that the use of their services is being borrowed each month before it is paid for. Before turning on electricity services, the electric company may check to see if the customer has good credit. This applies to many utility services including but not limited to cable, telephone, cable, water and even cellular phones.

Therefore, since a credit score is calculated based on one's management and responsibility with finances in the past and aims to be a good indicator of integrity with money in the future, many businesses, landlords, mortgage lenders, utility providers, and even employers use your credit to predict how financial relationships with them will progress in the future and if they will decide to start that relationship or not. Anytime you need to borrow money, or even services, your credit is called into question. This is why maintaining good credit is so important.