What Credit Means to you: from a Student to a Grown-Up
It is always talked about how important good credit is for everyone. You would be amazed how critical good credit is to you when looking at your life. To properly illustrate this, a trip will be taken down your potential life to see where credit can help you or trip you up.
When you graduate from college, you want to move to a new city and live on your own. If you have no credit whatsoever, you must have a co-signer who is willing to co-sign so that you can get a new apartment. If you have bad credit, this may result in being denied on getting the apartment you want to you may have to settle for an apartment in a less desirable part of town.
When you graduate from college, you may want a new car. If you have no credit or bad credit, you may also have the same problems as described in the previous paragraph. If you are approved but have only marginal credit, you may have to pay a higher interest rate such as 12-14% when many people with good credit can find great cars at dealerships and receive 0% or buy a used car and receive 6% from their bank. Do you want to pay 12-14% for your new car? It is less money that you get to keep every month.
Let's move to the job. Depending upon where you may want to work, you can potentially have to agree to let the company check your credit. This may result in being denied a job if your credit history is spotty. This probably does not happen but competition for jobs is fierce enough without worrying about your credit history coming into play as well. The credit check may come into play more when talking about jobs for financial institutions if you will be dealing with people's money and advising people on money.
Move to the next phase in your life: the American Dream. You want to purchase a house. If your interest rate is one percent higher as a result of bad credit, this can cost you around an extra hundred thousand dollars in interest depending upon when you pay your loan off and how much your loan is for. This may not seem fair but you can cost yourself a hundred thousand dollars just by not paying your bills on time and managing your credit responsibly.
This is just an example of a few different situations in your life where credit can have a major impact on what you want to do and what you have to pay for loans. Would you rather keep more money in your pocket or pay it out to companies? There is such a penalty if you do not manage your credit that it does not make sense to manage it so that you can have the most amount of money you possibly can. Do you want to cost yourself the chance at a great career because it is a requirement to check your credit before you receive the final offer on that new job?
These are serious questions which you must ask yourself because it takes time to build a good foundation but after the initial efforts, there is little effort which is needed. The good habits are in place to build and maintain the good credit.
