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As the world is slowly shifting to a cashless economy, the reliance on plastic money has risen enormously in the past decade or so. The credit card industry has seen a terrific boom in recent times, and for that reason, a good credit score is even more imperative than ever.
A solid credit score and responsible usage of a credit card can help you make big purchases and acquire loans with ease. One wrong decision, and you can spiral down in loads of debt.
Here’s why you should work towards establishing a solid credit score:
- Credit can make or break your mortgage plan: Even if you’re not in the market to buy a house anytime soon, it is still good to work towards establishing an adequate credit score that can help you down the line.
Once you apply for a mortgage, your lender will assess the risks involved and whether you should be approved for the mortgage, based on your credit scores. A lower credit score can result in disapproval or approval at a higher interest rate.
- It can impact your Auto-loans: buying a car while paying for your monthly expenses is undoubtedly a difficult task. If you don’t have a good credit score, your chances of acquiring a car loan are significantly lower. Even if you do get approved, most vendors will limit your vehicle choices and offer higher interest rates.
- Business loans can seem a distant dream: Most people dream of starting their own business someday, but do not have the capital required to initiate the startup.
If you don’t work towards a good credit score, your dreams of a successful business are bleak, as loan providers may not buy into your dream business due to your credit history.
- Utility service providers will require your credit scores: Even utility service providers for electricity, telephone and water connections will assess your credit history before establishing their services for you.
This makes it even more important to be responsible with your credit card usage.
How Can You Establish And Maintain Your Credit Score?
- For starters, know what a good credit score is
There are many online credit score calculators, check them out. Even a financial advisor can guide you on the matter. Check your payment history, impending debt and recent or past credit history.
- Pay your bills on time
Pretty self-explanatory. Whether your cellphone plan, the monthly utilities, or your Netflix subscription, pay it on time. Always!
- Manage your debt
Whether its student loans or an auto loan, remember that its not only your credit card that decides your score, it is your impending payments as well. The lower the debt, the higher are your chances to improve your credit score.
- Limit your credit card applications
only apply for credit cards when it is deemed necessary.
- Lastly, keep a track on your scores
Skimming through your credit card report now and then will make all the difference.
A good credit score can profoundly impact your financial well-being, and it’s essential for you to take the necessary steps to keep it looking good.