February 13, 2009

Do you sleep well at night.  Chances are if you are struggling paying your bills or never having any spending money, sleep might not be easy.  So what goes having a good credit score do for you?

The biggest thing that people identify a good credit score will do is save money.  That is right, a lot of money.  Any break you get on a mortgage will truly add up to thousands over the life of the loan.  Also, better interest rates on auto loans and credit cards will add into that total.  There is no real way to estimate, but it will be in the tens of thousands.

This extra money does wonders for you as a person.  Since you are paying less each month on things like a mortgage and a credit card, you will have more money in your pocket.  This can saved to create an emergency fund or just to spend.

To truly grasp what a good credit score will do throughout your life, just consider the increase burden of a $100 more per month in rent or mortgage.  Also, $100 more a month in credit premiums and $50 more a month in an auto payment.  $250 might not seem like that much, but for some people, it is the difference between living within their means and struggling to get by every month.

Furthermore, having a good credit score protects you from the outside forces of the economy as well.  Today with a credit crisis, getting a loan is not as easy.  Standards have changed by lenders and only those of us that have a good credit score will get the loans.

An even worse case is the potential loss of a job which is the trend currently in the country.  A good credit score will create less monthly obligations in the form of lower payments.  This means you can live on less.  This also helps to buffer the effect of less money coming in and gives you more time to find a job or another solution.

Having a good credit score is a matter of pride.  You should feel good about having one.  This is one of the pieces of being financially fit and will reduce your overall worries.