life at one time or another. Understanding how to build and improve your credit
score is a key factor to achieving financial success in life. There are a lot of people
out there who think that just because they have their paycheck directly deposited
into their checking account and are willing to have their loan payments directly
withdrawn from that same checking account that it will be easy to get a loan at
their local bank. While most banks will give you a lower rate or incentive to set up
an auto-pay from your checking account they still are going to base the initial
decision for the loan on your credit, not on your relationship with the bank.
Your ability to repay your debts and fulfill your financial obligations could
end up saving you thousands upon thousands of dollars through-out your
lifetime. It’s very easy to explain why. If you have a lower credit score lenders will
be hesitant to lend money to you because they know that you have had financial
troubles in the past. Because of this you would be considered a high risk to lenders and they will want to charge you more interest to offset that risk.
Whereas if your credit score is high lenders know their chances of collecting their
money/ interest are high and are comfortable charging you a lower interest rate.
There are also other applications that your credit can affect aside form just
loan or credit card applications. One of the most important of these is home and
automobile insurance applications. Almost everyone at some point is going to
need to have an auto insurance policy. Another more common application would
be for either cellular service or for a satellite provider. Just always try to
remember that banks are not the only institutions that require you to have good credit.