7 reasons why you should care about your credit score

So, I’ve spent the last 750 words or so criticizing why I don’t particularly like credit scores. But I am also realistic. Like it or not, credit scores are here to stay. And for most people, credit scores are an important number to track. This is why.

Credit scores directly affect your ability to obtain a loan. – Look, I’m not too fond of debt, and I think you should avoid it at all costs. But, as I mentioned before, I’m a realist. Without a loan, buying a home is nearly impossible for most people. I still think you should pay cash for your cars, but frankly, I know most people won’t heed that advice. So in most cases, having a good credit score is essential to saving money on some of life’s most significant purchases.

Credit scores affect your insurance rates. – Right or wrong, many insurance companies, especially when it comes to auto insurance, use your credit score to determine your rates. Insurance is quite expensive. Why make it worse by neglecting your credit score?

Your credit can affect your ability to get specific jobs. – Although your credit score is not used directly, having bad credit can prevent you from getting specific jobs. This is particularly true for jobs in the financial sector but is not limited to that industry.

Your credit can affect your ability to rent a house or apartment. – Landlords use limited credit reports to screen tenants all the time. As a landlord, this is one of the best tools for determining who will pay the rent. Again, credit scores are not used directly; however, they are a good indicator of whether your credit report has negative marks.

Sudden drops in your credit score may indicate identity theft. – Monitoring your credit score is not only a good idea when looking for a loan. A sudden drop in your score could tell you that someone is using your identity to open fraudulent accounts. That alone should be reason enough to pay attention.

It would help if you had a good credit score to get the best rewards cards. – As a credit card rewards enthusiast, it is important to me to maintain a good credit score to access the best rewards cards. The best cards usually require a score of 720 or higher. My family has used the rewards to travel the world for pennies on the dollar, which continues to have a good credit score near the top of my list of financial priorities.

Bad credit scores mean you’re not taking care of business. – Wait? Didn’t I spend most of this article saying that credit scores are not an indicator of financial strength? But again, I’m a realist. Most people are not millionaires. Most people have a lot of debt. In most cases, a bad credit score means you’re not paying your bills. If that’s the case, use your score as motivation to turn your fortune around and start taking care of business.

Where can I get a free credit score?

To ensure you’re on the right track, you can monitor your credit score through a free platform like Credit Sesame. I have used them for years and love them. They send monthly updates on my score, plus I get updates every time a new account is opened in my name, helping me spot any signs of identity theft early.

If your score isn’t as high as you think it should be, be sure to check your current credit reports for errors. Credit reporting agencies are also required to provide a free copy of your credit report every 12 months, and even if your score is good, it’s essential to look at these reports. You can order your free annual credit reports here.

Final Thoughts

Yeah, still, I wouldn’t say I like credit scoring. Yeah, I’ll probably always hate it, especially the way we think of it. Still, I understand that monitoring your credit score is essential.

By maintaining a good credit score, you’ll be able to get the best rates on loans and insurance, saving you thousands of dollars over the years. And most importantly, if it ever does happen, you’ll be able to spot identity theft quickly and stop it before it gets out of hand.