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Five Good Reasons to Manage Your Credit Wisely

Two teenage girls with a credit card.

Now that you know the best way to build a good credit history, you need to know why maintaining good credit is so important.

A good credit history will definitely help you get more credit. But did you know that it can affect your everyday life—even in the near future?

1. Your Car Insurance

A person with a perfect driving record may have to pay the same high rates as a driver with tickets and accidents. Why? Because in addition to your driving record, insurers use credit history to decide how much you pay. It may not sound fair, but it’s a fact.

2. Your Apartment

Landlords run credit reports. If you have a poor credit history, it will be very difficult to find a decent place to live. There will almost always be someone with good credit vying for the same apartment or house. If you were a landlord, which tenant would you choose?

3. Your Job

Most employers review your credit history before hiring you. Some employers won’t hire someone with a poor credit history. Others may use it to decide between two otherwise equally qualified candidates. In the business world, your credit history is a common measure of how trustworthy you are. Even if you earn your college degree, a poor credit history may seriously limit your earning potential.

4. You Will Need Loans and Credit Cards

Cash is not always king. Let’s say your first loan was a car loan. You weren’t so great at making payments on time. Now that car’s worn out and won’t make the long road trip you have planned. You have enough cash to pay for a rental car and hotel.

 5. Your Everyday Finances

This means how to buy things and pay bills. 

Be careful with your checking and savings accounts. Credit reporting agencies aren’t the only companies keeping track of you. ChexSystems is like a credit report for your savings and checking accounts. If you overdraw or mismanage your accounts and don’t pay back the money in a timely manner, you could end up in the ChexSystems database. Once you’re on it, you will have a very hard time even opening a savings account.

Your only option for cashing your paycheck will be to go to a high-priced check cashing facility. You will need to purchase money orders to pay bills and you won’t have a debit card to pay for everyday purchases. While all of your friends have a cool and convenient debit card, you’ll have a wallet full of George Washington.