Borrowing money is a part of life. Most of us try to do it as little as possible, at least if we’re conscious of the challenging of balancing income and debt. But we don’t avoid borrowing money either. We understand that without borrowing money, as in the case of a new house or vehicle, we probably can’t afford to get the things we need in life. If you make good use of the money you borrow, you’ll improve your station in life. Examples of this might include eliminating debt, increasing earning potential, or improving your lifestyle to the point where you can make a better future for yourself.
This is what borrowed money allows us to do. But without good credit, you may find that your borrowing options are extremely limited. In fact, bad credit is the norm. Most people don’t really understand what credit history is. They also don’t know what their own credit history communicates.
Personal credit history is a record of the way you’ve used borrowed money in the past. Even if you have an account with a utility company that is not up to date, this is a bad mark against you with regard to the way you use credit. In the case of utilities, the energy and systems used to bring the utility to you can be thought of as borrowed assets – things that you use before you pay for them. If, at the end of a month or billing cycle you do not pay them back on time or at all, you will have failed to repay borrowed money.
Every time you make a mistake like this, intentionally or not, there is a negative mark left on your personal credit history. These negative items accumulate until your credit score – the three-digit number used to represent the information contained in your credit history – goes low. A low credit score is a sign to lenders that you are irresponsible with borrowed money, and that you will be unlikely to pay it back on time. If they offer you a loan at all, it will likely be expensive. You may not be able to find someone to give you money.
The borrowing experience is completely different for someone with good credit: http://aaacreditguide.com/personal-loans/best-personal-loans-for-good-credit/. These people may find that lenders everywhere want to give them money. This is because, for these lenders, the interest and fees they incur over and above the monthly premium payments, are all profit. People with good credit make great borrowers.
Therefore, the better your credit, the more borrowing options you’ll have and the less money you’ll pay for these opportunities. You may find that people who work at banks are friendlier to you, and that you have better options when it comes to housing and career advancement. This is because, when it comes to holding up your end of the borrowing bargain, financial entities know that you are trustworthy, that they will have profit by dealing with you without having to chase you around for payment.
Borrowing with good credit is simply better.