It is a fact that the entire economy runs on credit. If you have student loans, are considering getting a mortgage, or are planning to buy a car, there is a lending company willing to provide you with a loan. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an original essay However, your creditworthiness in the eyes of the lender must be in good standing to get a favorable approval. Creditworthiness is defined by your credit score and typically determined by a scale of hundreds, with each category being a range assigned a label such as poor, fair and good. Kind of like the grades you receive on a test based on your percentage range. Essentially, it is a measurement tool that measures your repayment responsibility and acts as an indicator of the effectiveness of your debt repayment. If you have higher debt and are having difficulty making your monthly payments, you will have a hard time getting a credit card that has a low interest rate. And when your application is approved, the bad credit holder will be required to make a guaranteed deposit to obtain a credit card. Building Your Reputation for Reliability Now let's talk about how you build your credit history. Essentially, you take out a loan, using your credit card or paying your bills, but the main thing is to pay off all your credit on time. When you manage to repay everything on time, the banks will reward you. Being responsible and punctual in your payments will not only give you relief, but will be a long-term benefit as you maintain good financial habits and trustworthy status with banks. The following reasons highlight the importance of building and maintaining a good credit score. Buying a Home Owning a home is one of life's greatest accomplishments, but it's one of the hardest if you have bad credit. The recent recession has led to foreclosures, including a housing crisis. Even though the housing sector is stable, lenders remain cautious about lending with strict requirements, making it difficult to apply for a loan. If you are considering renting, be aware that the credit score is part of the requirement. A bad credit score is an automatic denial and perhaps the rental company will require a higher deposit, including adding a guarantor. This methodology is often used by rental agencies to decide your ability to pay monthly rent. When you're ready to buy a home, be prepared to disclose all your debts and investments. With an excellent credit score, mortgages typically come with low interest rates and a longer payment plan. This translates into huge savings and the ability to afford a larger home. Buying a car Many people opt to finance their car. This type of loan is lower than a home loan and even people with poor credit are still approved. However, bad credit results in a larger down payment and high interest rates. The loan will cost you because you will end up paying a lot more than someone with a high credit score. After purchasing the new vehicle, you will need a car insurance policy. Insurance companies often run a credit check when calculating premiums, which means you save more when you're in good standing. Land a better paying job,.