Credit affects every area of life. When your credit is bad, it follows that your life may face similar hardships in the areas of:

• • Loan applications. Lenders rely on credit to recommend new customers. When your credit is low, your borrowing power is stifled by risk. In this economy, mortgage and auto lenders are tightening their restrictions when it comes to drafting new loans. More is required of the average borrower, including a sizable down-payment and a credit score of 720 or higher. If your credit score is stalled, it could spell trouble when applying for a new loan.
  • Interest rates. Interest rates depend heavily on your credit score, a number that is calculated based on the level of risk found in your credit report. If your past is peppered with late payments, collections, bankruptcy, etc., the result may equal higher interest rates. As your credit score improves, you’re likely to see a reduction in interest, allowing you to save money over time.
  • Insurance premiums. Insurance is the business side of risk mitigation, so it’s no surprise that a clean credit report results in better rates. Insurance providers rely on your financial track record to determine your risk levels in other areas of life. A low credit score is often viewed as high-risk behavior.
  • Employment opportunities. Many employers now require credit checks before hiring a new team member. The job market is competitive, and managers use this strategy to gauge a new-hire’s level of responsibility. Despite your qualifications, a bad credit report is likely to make you seem disorganized and careless—two qualities that should never appear on your resume.
  • Savings. Favorable loan terms, interest rates, insurance premiums, and employment all add up to one sum: savings. A good credit score means leaner options. The less money you spend, the more you’ll have to save for emergencies, retirement, and education.

The U.S. Economy

You aren’t the only one who benefits from better credit. The U.S. depends on responsible behavior from its citizens to keep the economy running smoothly. Roughly 70 percent of the Gross Domestic Product (GDP) is fueled by consumer spending. The GDP is the current market value of all goods and services. When consumer debt exceeds an amount that government can safely liquidate, inflation occurs to bridge the gap. This process devalues the dollar and drives up market prices, making it more difficult to maintain the same standard of living over time. Americans are forced to spend less, resulting in an economic stall. Extreme cases can lead to national depressions and crises such as the housing market crash. While spending too little is never good for the economy, spending too much may be equally damaging.
When it comes to good credit, the stakes are high. Do yourself and your country a favor by taking the necessary steps to improve your life. It’s never too late to make a change.