Are you planning on taking out a loan to buy a home, open a credit card, or pay for school sometime in the future? Whether it be for your education, real estate, or a new business start-up, good credit is necessary if you want to borrow money. A positive credit score can open more doors to attractive financial opportunities for you allowing you to apply for a home loan, car loan, or even a business loan from SBA Seattle.
4 Reasons You Should Improve Your Credit Score
Regardless of your past credit history, here are four reasons why you should take actionable steps to improve (or start building) your personal credit score:
1. The Purchase of a New Home
There’s a lot of thought that goes into purchasing a new home – the location, the realtor, the total cost of your home, as well as numerous other things. If you’re looking to invest in real estate, it’s crucial to raise and improve your credit score when applying for a home loan. Keep in mind that the higher the credit score, the lower the interest rate.
2. Starting a Business
More often than not, aspiring business owners need working capital to start their new business venture. While borrowing money from friends and family is an option, many would-be entrepreneurs prefer to take out a small business loan.
Potential lenders factor in your personal credit score and history in order to determine if you’re eligible for financing. Whether you’re starting a business from scratch or expanding your existing one, your personal credit score will greatly affect your business loan applications.
3. Getting Better Interest Rates
While good credit is important in securing financial assistance, many private sector lenders are still willing to fund people with bad credit. However, with poor credit comes more documentation and higher interest rates. This is how banks and other private lenders balance their risk of lending money to people with poor credit.
Lower interest rates mean more savings in the long run, so make sure to keep your credit score under control. You can improve your credit rating by making house and car payments regularly and on time, paying off your credit card in full every month, and paying off current loans before the loan period ends.
4. Buying a Car and Applying for an Auto Insurance Policy
Cars are a common purchase among Americans, and most of the time, people take out car loans when buying a vehicle. People with poor credit can still obtain financing since car loans are typically for smaller amounts than are house loans. With poor credit, you can be certain that financial institutions will charge you higher interest rates and require larger down payments.
After buying your new vehicle, you will need to apply for an auto insurance policy. Most insurance companies now consider your personal credit score when determining premium payments.
SBA Seattle: Small Business Loans for You
If you’re looking to start your own business, a good credit score will help you save money in the long run. SBA Seattle helps small businesses securing long-term business loans. To get all the details, contact the experts at SMB Compass.