Your credit score is a number ranging from 300-850 that indicates how reliably you pay off debts and loans. These debts and loans include credit card payments, bill payments, and other types of loans. When you regularly pay off these debts and loans on time, it improves your credit score. Building your credit score while in your 20s can set you up for a better future.
Find Apartments to Rent
Whenever you apply for a loan, the lender will look at your credit score. Certain credit scores may disqualify you from receiving a loan. If you build your credit score, then you will be able to get the loans that you need. For example, you may not be able to afford to rent an apartment all on your own. Getting a loan can help you cover the rent so you can live comfortably. Meanwhile, you will pay off the loan over time. As you pay off this loan, you will also be continuing to build your credit score. However, if you have a bad credit score, then you may not qualify for the loan and you may not have a place to live.
Buy a Home
When you buy a home, you will need to take out a mortgage in order to actually purchase the home. During this process, you will pay a down payment and the mortgage lender will cover the rest of the cost and you will pay back the loan over a predetermined amount of time. In order to actually get a mortgage loan, you need to qualify and this includes having a good credit score. You can still buy a home with bad credit, but your options may be limited. Not everyone is buying a home in their 20s. That means you can use this time in your life to build your credit score so you can qualify for a mortgage when the time to buy eventually comes.
Purchasing a Car
Much like buying a home, buying a car typically requires people to take out a loan. If you want to qualify for a loan in order to buy a car, you need to have a good credit score. In many cases, dealerships will advertise low interest rates for their cars. However, these rates often only apply to people who have higher credit scores. If you want to get good rates, you need to improve your credit score.
Your credit score will have a major impact on your future ability to qualify for loans. If you plan on making any big purchases in the future, you need to have good credit. Start now to build your credit score.
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