Five Reasons to Care About Your Credit Score

Couple working on paperwork with laptop

1. Blue Bliss

A blue chip credit score has a lot of very real advantages. It’s a mark essentially of how good a risk you are and the lower risk you are the fewer conditions a lender will impose on you to lend you money.

2. Rate Rules

A good credit score makes a big difference in the interest rate a lender will charge you. A person with a good credit score may have to pay 13 per cent to borrow $10,000. An average or poor credit score may have to pay 15 per cent. That difference adds up. The good credit risk would have to pay about $3,650 in total interest, the poor credit risk would have to pay about $4,275 – that’s $625 more. On a monthly level, the good credit risk would have an extra $10 in her pocket.

3. Load Me Up

Good credit risks can also borrow more. That could be the difference between having enough capacity to buy a home you wanted and not. Lenders review both credit history and credit score along with assets, liabilities income and expenses when determining how much they will lend.

4. Give Me More

A higher score also gives greater choices. More investment loan options will be available to lower risk customers. Mortgage insurance may be cheaper or more flexible if a person has a demonstrated commitment to paying back borrowed money.

5. Speed It Up

Lastly, a good credit score is also likely to mean a borrower needs less paperwork. A poorer credit score will mean a lender is likely to want more certainty in order to assess your risk.