Why Taking Care of your Personal Finance Pays Dividends (literally)
Having healthy personal finance is important for many reasons. Some people do not understand the benefit of having good personal finance and should stay away from credit cards or simply should not have them at all. Although there are some great benefits to having a credit card, it’s important to know when not to use it and how to use it.
Here are five reasons why you should strive to have a clean bill of personal financial health.
1. Good Credit Score
This is really important, especially in today’s world with the economy still recovering from the Great Recession of 2008-2009. A credit score can range anywhere from 300 to 850 with most scores falling between 600 and 750 with 850 being the best possible score. It is important for anyone to check their credit score first before applying for any form of loan, which includes mortgages.
Not only checking your credit score is important but paying on time and not getting into too much debt can help you reach that all-important goal of having a good credit score.
You can check your credit score for free using Clearscore.
2. Lower the cost of your insurance premiums
Having good personal finance can lower one’s insurance costs. This can include homeowners and renters insurance, car insurance, and life insurance. Having good personal finance can lower your monthly premiums for each of these insurances. However, it is important to note that having good personal finance will not automatically ensure having a cheaper car or home insurance rates as most companies have their own rules when they are willing to provide discounts.
3. Applying for loans will be easier
Having healthy personal finance can help you easily apply and qualify for loans and credit cards. Most companies would rather work with someone who has a good track record of paying their bills on time, as it is more favorable to the company’s risk when lending money. Being able to borrow from these lenders can be helpful as it can be used for anything from buying a car to going on a vacation.
4. Access to better rates
Not having good personal finance can make it difficult to get the best interest rates from lenders as those with good credit scores are more likely to be approved by companies and banks when borrowing money. Having a good personal finance report is definitely an advantage when applying for loans or credit cards.
Your credit report contains all the information on how well you have managed your existing debts and loans. This report is then used by your lender to determine whether or not they would like to extend you a loan and what interest rate they will charge you for it.
Lenders look at the credit score in order to protect and maximize their profit and minimize risk. So, in case you have a good credit report, lenders will be more likely to approve your request and give you a better interest rate.
On the other hand, borrowers with lower credit scores will find it more difficult to find lenders and may be offered loans at higher interest rates. While these individuals might not have bad intentions of paying back their debt, such as those who may have suffered from unexpected financial or medical problems, they still possess low credit scores due to these events.
Therefore, a good credit history will not only help you get a loan approved more quickly but will also give you access to better interest rates when borrowing money.
5. You have more financial options to choose from
Having good personal finance can open doors to more options when it comes to making financial decisions, such as getting an insurance policy with certain restrictions that are waived if the applicant has a healthy personal finance history. It can also allow you to move your money between banks and even switch jobs without having to worry about losing your accounts or money.
Having good personal finance is important not only to the individual but it can also help them in getting a job and be able to move up in their career faster than those who do not have good personal finance. This is because most employers believe that people with poor financial health cannot handle or manage their money properly which can reflect poorly on the company.
If you want to get ahead and stay there, it pays not just to look after your personal finances but also to take advantage of opportunities that may arise. The more options we have at hand for how we can use our money, the better off we are in life. And if you’ve been neglecting your financial history or keeping it hidden from view, make sure this changes today because doing so could save you thousands of dollars in interest repayments by having a clean record.