Most teenagers head off to college without knowing a thing about credit. People often find themselves just getting through it in their early 40’s if not later. The good thing about credit is that you can improve it and you can start at any time. However, bad credit will not improve overnight and in the meantime you can be setting yourself up for a world of problems.
In this article you will find nine reasons why you need good credit. This list is not only things that make life more fun, or a bit easier, but some of them are crucial to living life without constant problems.
1) Buy a Car
Buying a car is not impossible with poor credit, although poor credit can make it much more difficult, and expensive. Most people require a lender to buy a car. The first thing that lender will do is look at your credit score, and how you manage your credit. The lender wants to know that you will be able to pay back your loan.
Many people think that if you don’t pay back your loan the lender will simply take the car, and sell it, making money anyway. However, it doesn’t work that way. And if that is the way you think, then you might already have bad credit. That is exactly how the lender will think as they review your credit usage. To offset someone with poor credit, a lender may accept your application and give you a loan, however you may have to pay an abysmal interest rate, and be caught in a loan that is not worth the value of the vehicle.
Of course the other option is being turned down entirely for a car loan, which is becoming much more common.
2) Buy a House
If you have bad credit you can pretty much say goodbye to a mortgage. But there is always someone out there willing to do it for the right price.
One of the reasons why banks won’t even look at you, if you have bad credit, is because of the problems associated with the country’s last real estate crisis. Lenders were giving loans away to people who they knew couldn’t afford it. This caused so many problems and foreclosures that the banks are now much more cautious than before.
The slightest ding on your report, such as a missed payment, is enough reason to turn you down. If you do somehow find a lender willing to give you a loan, you can expect a much higher interest rate, as well as the need to put more money down prior to purchase.