For most of us, credit is the financial lifeline that gives us flexibility and freedom. After all, it’s what dictates the house or car we can buy, as well as how much certain everyday necessities are going to cost us in the long run. It’s a long, tedious road to building up your credit score, but eventually, one day it’s going to come in handy for some of the life’s biggest decisions. That’s why we’ve compiled a few of the most common scenarios where good credit can come in handy. Check them out below:
Getting married is something a lot of couples wait years before they decide to do. Not always because they’re not ready, but because of the cost associated. It’s estimated that your average wedding costs approximately $27,698, which is a hefty price tag for your special day. That’s why establishing a solid line of credit to loan out some of the extra costs potentially might make it worth the wait.
Getting a Credit Card
As one of the primary sources of establishing credit, having a credit card is something almost anyone can get, but quality rates and incentives are reserved for those with good to outstanding credit. In other words, getting a credit card is most worth it if you have credit established. According to creditcard.com, almost 71% of the U.S. population has a credit card, which when you factor in the numerous types of credit cards, it’s no wonder some folks hold off on making their credit card a primary spending source.
Buying a House
Homeownership is a cornerstone of what a lot of folks consider the American Dream, but it also is one of the most significant investments you can make. That’s why establishing excellent credit is so imperative before buying, as this is something you’re going to be stuck with for awhile. As Smart Asset notes, the suggested bare minimum credit score for purchasing a house falls around 660, so take your time in building up to this point.
Buying a Green Car
Akin to owning a home, most people consider buying a car as the second most primary purchase you can make. And even though most consider car buying to be slow, according to a report by Bloomberg, the majority of cars bought in 2014 was millennials. Building credit before this decision can save you a ton of money, especially when considering that cars are depreciating assets.
Renting For The First Time
Most people don’t consider that credit plays a significant role in renting an apartment or home. As Credit Karma notes, those with little or poor credit history are going to pay more when it comes to putting down a deposit. This can be costly down the road, especially if you’re dealing with a landlord that overcharges for routine maintenance drawn from the security deposit.
Honestly, it takes years of building credit before most utility companies will forgo charging you deposit. According to the FTC, this is a perfectly reasonable practice and one that’s common across the board. However, by developing a solid line of credit (or even proving good credit history with previous utility bills), you might be able to circumnavigate it.
Taking Out Loans for College
With the rising costs of college, taking out loans are a long-term commitment you might end up paying significant rates on. And as CreditRepair notes, with rising costs of both tuition and housing, the comparison of being paid much more out of school might not always be worth. It’s best you assess what you’re really after before committing to a school.
Starting a Green Business
Believe it or not, credit plays a pretty vital role in if you’re looking to start a business. Not only could a line of credit help you expand but it could also be helpful if your firm is going through some tough times. Additionally, as NerdWallet outlines, there’s a big difference between a business credit score and a personal credit score. Considering your personal score might be examined with more scrutiny until establishing a business one.
Applying for a Job
According to the Society for Human Resources, only 13% of recruiters actually examine a person’s credit score for a job. However, that doesn’t take into account the type of positions people are applying for, as well as the responsibilities entailed. Depending on the industry, your credit score might play a role one day regarding if you get a job or not, so your best bet is to start preparing yourself now to maximize your opportunity.
Getting a Divorce
As sad as it is, almost half of marriages still end in divorce according to the CDC. And while getting a divorce doesn’t directly affect your credit score, you might still be liable for any financial obligations split with your significant other. That’s why protecting yourself from the worse is key is it can save you tremendously in times like this.