Sense & Centsibility Blog

Why is Credit Important?

At some point in your life you will have to deal with credit. Maybe you are a college student and looking to rent an apartment. Or maybe you are interviewing for a new job.  Did you know that some potential employers will pull your credit before they offer you a job? When I left home for college I had no idea what credit was and honestly didn't care. And I think the first time I thought about credit was when I shopped at American Eagle and they offered me a store card. Yes please! But credit is dangerous and invisible.

Why is Credit Important?

There are so many times in your life that you may need credit. Here are a few examples:

  1. Buying a House or Renting People with bad credit usually have to pay a higher interest rate on their mortgage. Even landlords look at credit reports.
  2. Employment Some employers will pull your credit report before they decide to hire you. Your credit report is like a snapshot of your past financial decisions. It's hard enough to find a job these days so don't give a potential employer another reason not to hire you.
  3. Car Insurance Your car insurance premiums can increase if you have bad credit. And some insurance agencies will review your report when it's time to renew.
  4. Universal Default If you are late on a credit card account, other credit cards companies may decide to increase your interest rate.
  5. Loans There will come a time in your life that you will need a loan. Banks are more strict than ever before when they look at who to loan money too. Good credit is key.

There should NEVER be any surprises on your credit report. That's why it is important to always keep a close eye on your report, pulling it at least annually, if not 2-3 times per year. Another important number to watch is your credit score. Although the number doesn’t define who you are as a person, it is important to have a strong credit score. The most important reason for a strong score is it saves you money. And who doesn’t want to save money? People who have a higher score are generally approved for lower interest rates and fees on loans. The same applies to credit cards.

Where to Get Your Credit Report?

Although certain places advertise free credit reports, what they don’t tell you is you will have to pay for your credit score if you want it. The reports may be free, but a credit score always costs something. Less reputable sites may also try to sell one of their products like credit protection in exchange for getting your “free” report.

One of the best websites for pulling your credit report is  Using AnnualCreditReport, consumers are able to pull their reports from all three of the major reporting bureaus. You can pull your credit reports all at once or one-at-a-time throughout a calendar year to keep an eye on your credit. Visit our resources section to learn more about strategies for maintaining and improving your credit score.

Please Remember This One Thing!

If you take one piece of information from this post please remember all consumers are entitled to a free copy of their credit report once a year, or if they are denied credit. Get a copy of your credit report and review it from beginning to end.

What's Next?

Give us a call at 1-888-577-2227, or visit our website. Maybe something doesn't seem right on your report. A certified consumer credit counselor will help you understand what is on it and help you create a plan to improve your credit report and score. There should never be any surprises on your credit report.