why should I check my credit score

Why Should I Check My Credit Score?

In February 15, 2019

Why should you check your credit score? You, along with many other people, may be under the impression that your credit score only really matters when it comes to being approved for a loan or credit card, but it goes beyond that. Your overall score can affect your ability to purchase a home or car, get a job, or even find better insurance rates. Knowing your credit score and credit history are vital pieces of information that are important to your overall financial wellbeing. It’s important that you are aware of your current credit score and your credit history so that you are able to determine your current credit position. Knowing where you stand on the financial spectrum will help you determine whether or not now is a good time to pursue a credit application or wait a little longer until you are in better financial standings. Below are a few reasons why checking your credit score is important.

checking my credit score
Knowing your credit score can help you determine the types of purchases you can make, get a job or even lower interest rates.

Why Should I Check My Credit Score? | Maintaining a Good Score

First and foremost, it’s a good idea to know how certain transactions can impact your credit score. As your credit changes, you want to follow the changes that occur so you are better able to prepare yourself for future transactions. Let’s say for example that you purchased a new home. In order to furnish your new home, you financed a large furniture purchase. As a result,, credit card companies may equate this activity to a maxed-out credit card causing your credit score to drop slightly if your lucky or significantly if you are not. Yes, this change is temporary. You can re-establish good credit by building a good payment history as you pay off the purchase. As your balance drops, your score will increase once again. However, let’s say you needed to make another big purchase not too long after financing all that furniture. You apply for a car loan, but because of the significant decrease in your credit score, your chances of getting approved become more difficult. If you get approved, you might be looking at a higher interest rate. That brings us to the next important reason to check your credit score – better interest rates on loans.

Why Should I Check My Credit Score? | Great Rates & Perks

Financial service companies tend to group borrowers based on their credit score. These credit score ranges may determine how much you’ll be charged for your insurance coverage, the interest rate you pay on your mortgage, student, or car loan and the type of credit card you’re eligible for. However, if you know your credit score ahead of time, doing a little research can help you determine how much you should be paying in interest on a loan before you even apply. For example, you have a credit score of a 740 or higher. Based on your current credit, you can expect an interest rate of around 3.75% on your 30-year mortgage. If a bank offers you 4.25%, you’ll know to keep looking elsewhere. Additional benefits from getting better rates are even better rewards. The most compelling credit card-related reason to know your credit score isn’t necessarily about getting a lower interest rate. The big difference is the level of rewards you can expect to receive. A few of the rewards programs can be pretty profitable. For example, the Capital One Venture Card offers two miles per dollar on all purchases every day. As an additional sign up bonus, you’ll get 50,000 miles if you spend $3,000 in the first three months. As a result, those 50,000 miles are now worth a $500 plane ticket! 

Checking your credit score when applying for a car loan
Maintaining a good credit score can increase your chances of getting approved for a car loan with better interest rates.

Why Should I Check My Credit Score? | Car Insurance

Speaking of transportation, another reason you’ll want to keep track of your credit score is for car insurance premiums. A low-interest rate on your mortgage and great rewards aren’t the only benefits of having good credit. Many people don’t realize that their car insurance premium rates may depend on their credit score. Based on a study by WalletHub, there is a 49% difference in the cost of car insurance between a person with excellent credit and one with low or no credit. 

Why Should I Check My Credit Score? | Job Hunting

Besides just finding good interest rates and great benefits, having a good credit score can help you get a job. Not all employers will necessarily check your credit. For those who do, they will only have access to an employment screening version of your credit report which contains some but not all of the information in a regular credit report. While they will not have access to your credit score, they may have a general idea of where it falls based on the information they see in the report. Therefore, in a roundabout way, having a low credit score can play a role in your ability to land the job. It’s always a good idea to check on your credit before applying for a job.

When it all comes down to it, your credit score plays more of a role in your financial life than you may think. Knowing your score is the first step to improving it. Get ahead of the game. If you are not sure what your credit score is, there are plenty of resources you can utilize to find your score or history. Credit Karma and FreeCreditReport to name a few. Don’t forget to visit VitalChek.com for all your official document needs!

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