I'm habitually messy, it's true. When I lived alone, my space quickly turned to squalor: dishes piled in the sink, laundry strewn about the closet. I was fine with it, but when a friend was scheduled to drop by, I was forced into turbo mode. I wildly crammed clothes into drawers. I superficially scrubbed dishes with frantic speed.
An unattended credit score is kind of like my messy apartment. When someone important wants to look at it, you could fumble at a facelift in the few days beforehand, and only end up doing a half-baked job in the end. Like your home, it's best to tend to your credit score consistently so it's ready when you really need it. And when is that, you wonder? Read on to learn about a few key moments when all your hard work and consistency can pay off.
Buying a Car
Unless you're prepared to pay in cash, your credit score could be vitally important when you're looking to buy a new automobile. Lenders take a number of factors into consideration when it comes to your auto loan, including the amount you're looking to borrow, your debt-to-income ratio and the age of your vehicle, but the first step in the loan process is often that three-digit number. A better credit score in this situation could potentially save you money and time via friendly terms, including lower interest rates, longer term lengths and smaller down payments.
Your credit score doesn't only factor into your auto loan, though. When you're looking for auto insurance to go with your brand new purchase, your auto insurance score, based on many of the same factors as your credit score, could also come under consideration. That's right, on-time payments, low credit card utilization and a long credit history could potentially get you lower premiums.
You can put this theory to test right now on our auto loans page, as well as with our auto insurance feature. Explore your personalized offers to get a better sense of how your credit score has affected the terms available to you.
Credit Card Hunting
If you're looking to get a credit card with low interest rates, cash back bonuses or enticing benefits, your credit score can be crucial to the process. When you apply for a credit card, lenders usually will look at your credit score as evidence of your reliability and your ability to pay back debts. A long history of credit success, a track record of on-time payments and little or no blemishes on your credit report can all contribute to a healthy credit score, and could translate into desirable terms.
How important your credit score is to your credit card search is obvious on Credit Karma. If you're interested in exploring further, I'd suggest checking out our Best Credit Cards listings, which have offerings sorted by credit score range. Take special note of both your estimated Approval Odds and the average score approved for each card to get a better idea of how your score might influence your approval chances, terms and benefits.
This one's a biggie.
If you're looking to buy, entering into a mortgage or home loan might be one of the biggest financial moments of your life. Important terms like interest rates, term length and down payment will likely be decided based on a number of factors, including salary and work history, available savings, market conditions and, yes, your all-important credit score. Mortgage lenders use your credit score to get a grasp on your payment history and length of credit experience, among other important details about your credit. Getting the best deal on a home loan could potentially come down to your credit profile, and even a slight difference in interest rates could possibly save you thousands of dollars in payments down the road.
Our consumer reviews are a great illustration of how important your credit score can be to the mortgage application process. By browsing through the entries, you can see how widely terms could vary and how important it is to have a good score before you enter the process.
When You're Doing All the Right Things
If you're looking to stay financially healthy, then it's probably advisable to treat your score as if it's important at all times. To harken back to my original analogy, having healthy credit isn't about pulling your score together at the opportune moment, but about habit and persistence instead.
If your score isn't perfect yet, all isn't lost. Just keep your credit health in mind so you aren't caught shoving dirty jeans into drawers while your guests are knocking down your door. You can start the clean-up right now by checking out your credit score on Credit Karma to see how you've been doing so far.
About the Author: Mike Goldstein is a Content Writer at Credit Karma. Since joining the team in June 2013, he's been delivering the financial know-how on the daily. When away from work, you can find Mike watching hockey, Twittering for hours and frequenting trivia nights.
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