Prior credit mishaps make many people gun shy; it’s understandable to want to live plastic-free if you have had trouble managing credit in the past. There are those who espouse the merits of a cash-only existence, and they have a lot of arguments that are sound. But, there are also many things that they miss. You may be surprised to learn that, even though you may never need or want a credit card, your credit score still has a huge impact on your life. A few ways a bad credit score can hurt you:
Why Your Credit Score Matters
While you definitely can get insurance with bad credit, it will cost you more. According to Insure.com, bad credit can cost you up to 10% extra in car insurance premiums. Over a period of years, this can add up to thousands of dollars. When you raise your credit score, this frees up cash every month while providing you with the same level of coverage you had before.
Having bad or no credit means having a lot more of your cash tied up in deposits for services. Without good credit and a history of paying utility bills on time, getting electricity or water turned on at your place can cost you the equivalent of two months worth of bills. When you rent a car with a debit card instead of a credit card, you could be required to tie up hundreds of dollars of your own money during your trip. You may even be required to put down a deposit for a cell phone with some providers.
Losing Out on Job Opportunities
In these unstable financial times, more and more employers are checking applicants credit scores when making hiring decisions. Many believe that a good credit score is a sign of a more stable and conscientious worker. Whether that holds true or not, the belief itself can keep you from getting the job you want.
Escaping from Renting
A home purchase is generally seen as one of the best ways to build stability. When you rent, your cash disappears down a hole every month; when you own your own home, part of what you spend each month goes back in your own pocket in the form of home equity. And, owning a home can make retirement much easier since you’ll either have a paid-off place or saved up cash to build your lifestyle.
But, buying a home is almost impossible without a good credit score. Those with poor credit usually have to come up with much larger down payments if they are approved for a loan at all. And, the interest rates that are available to someone with less than sterling credit are higher, meaning tens of thousands of dollars down the drain over the years.
Having a good credit score is about much more than access to credit cards. It can affect your opportunities and your quality of life in dozens of different ways. If your score has taken a hit because of mistakes in the past, credit repair can help you fix it and improve your chances in life.
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