A good credit score and credit report opens many more financial opportunities. It can be used to obtain loans or credit cards and help with rental applications or insurance rates.

Developing a good credit profile starts with basic money-management skills using tools like Current, including opening a checking account and paying bills on time. It also requires learning about the basics of credit scoring and how to build a solid foundation.

Lower Interest Rates on Loans

A good credit score opens the door to financial opportunities and helps you save money. For example, if you need to purchase a car or a home, you can borrow money from banks at lower interest rates.

As your credit score improves, you may qualify for a credit card with lower interest rates and rewards programs like cash back. Additionally, you can use a credit-builder loan to establish a good track record with lenders and help improve your score.

Lower interest rates encourage consumers to spend more, while higher interest rates discourage spending and encourage saving. Ultimately, these decisions influence the overall economic climate and impact businesses. When rates are low, companies find it easier to obtain bank loans and finance their operations.

Access to Credit

A good credit score opens financial doors that would otherwise remain closed, from getting a mortgage to buy a home or car to starting or expanding a business. It also helps consumers save money and build wealth.

Despite laws against redlining, information barriers limit access to mainstream credit for people of color, low-income, and other marginalized groups. Moreover, attempts to broaden access by lowering screening standards can have unintended consequences for both consumers and the economy.

The new questions added to the 2020 Census Survey allow us to examine perceptions of credit availability by race and ethnicity. While causation is difficult to identify, these preliminary results support addressing credit constraints for community well-being. More research is needed on the implications of these questions for small-business owners, but they offer a lens to evaluate the fairness of credit provision.

Getting a Job

Many financial products and services require a credit check, from loans and mortgages to rental housing and utilities. A good credit score opens the door to these opportunities and allows for better terms, potentially saving tens of thousands over your lifetime.

Beyond the monetary benefits of a job, having one can bring satisfaction, meaning, and personal growth. And while it may be tempting to go for the highest-paying job, research shows that a well-chosen career is more important to your life's happiness than just making money.

Getting a Mortgage

Home purchasing can be one of the most important financial decisions you make. But the process can be daunting and expensive if you don't understand the basics.

Your credit, debt, and savings are critical to the mortgage approval process. Lenders look at your credit history in a report and your credit score to determine whether you can afford the mortgage payment and loan terms.

Different lenders have different lending guidelines, so a good credit rating might qualify you for a loan at one lender but not another. Employers may also check your credit report before hiring you, and landlords use it to assess your ability to pay rent on time. Knowing how these money moves impact your life can help you make better choices.

Getting a Car

A good credit score can help you get a car. Whether buying your first set of wheels or looking for a more impressive ride, having a good credit score shows employers, landlords, and lenders that you are a responsible individual who will repay the debt on time.

You can improve your credit score by becoming an authorized user, getting a secured card, and making on-time payments. You should also monitor your credit reports and scores regularly to spot errors or changes in behavior. Credit-builder loans, which many banks offer, are another option for people without a credit card and work similarly to a secured card. A down payment is also a good way to show you can afford the loan.