Why do you need to increase your credit score?

I have been asked this question many times. Why do you need to increase your credit score? The answer is simple- a good credit score offers you the best options in financial matters. You can get a loan, mortgage, credit card and most other benefits even if you have a poor score. So why bother? Here are three of the top reasons why you should worry when your score is low:

1. Wasting your money – Loans for individuals with low credit scores are available, true. However, these loans come at a price- higher interest rates. This means you actually use more of your hard-earned money in order to pay back the loan. This extra money could be used to purchase something else or put towards retirement savings.

2. Always under scrutiny – A poor credit score says tells the credit bureaus that the person is someone who cannot handle finances responsibly. This makes creditors wary and you will always be under greater scrutiny. You will also need more collateral and/ or a co-signer when applying for a loan.

3. You cannot make a mistake – High scorers can skip payments infrequently and be forgiven, but not a consumer with a low credit score. Many creditors panic if a low credit scorer misses a payment or shows any deviation of the repayment terms. In response, the creditor can alter the terms of your agreement by raising your interest rates.

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