A good credit score increases your chances of getting approved to buy a home. It can make it easier to rent an apartment, lease a car, and get approved for credit cards with higher spending limits. Whether you know it,…

A good credit score increases your chances of getting approved to buy a home. It can make it easier to rent an apartment, lease a car, and get approved for credit cards with higher spending limits. Whether you know it, your credit score determines more than your financial future.

Not surprisingly, a bad credit score can make doing all of those things more challenging. To put it simply, you want a good credit score.

While obtaining a good credit score isn’t easy, it’s not impossible. This article highlights the importance of a good credit score and the steps you can take to achieve one. Keep reading to learn how to improve your score — and your future.

1. Limited Access to Credit Cards

Every time you apply for a credit card, the issuer reviews your score. If you have a low credit score, likely, you will only be approved for cards with high-interest rates. If you leave a balance on your card, you owe a higher percentage to the issuer.

But with a high credit score, you get lower interest rates, and there are also perks involved. Some of these include travel points and cash back on purchases. Good credit can also help you get approved for a card with a higher credit limit. This means you’ll have more money to borrow if necessary.

2. Fewer Housing Options

Regardless of whether you want to rent a house next year or buy in several years, you want options when the time comes. Well, that can only happen if you have a good credit score.

It doesn’t matter if you can financially afford the monthly payments. Believe it or not, landlords can check your credit history before approving your application. If your score is low, you might not land your dream apartment.

And if you’re looking to purchase a home, you have to get approved for a mortgage. While you may get approved despite your bad credit, you will be penalized with a higher interest rate. The better your credit, the easier it’ll be to get approved for a loan with lower interest rates. Roughly translated, this means you’ll pay far less over the life of the loan.

3. Paying More for Insurance

Your credit score can also determine your insurance premiums. The score is taken into account when the insurer calculates your monthly payment. Some insurance companies, like home and auto, review your credit score beforehand to see how responsible you are with your money.

In addition to potential auto and home insurance hikes, a bad credit score could affect your ability to get something as seemingly simple as Wi-Fi. If you have a poor score, utility and internet service companies might require a deposit before providing their services.

4. Difficulty Getting a Job

Did you know your credit score can impact whether or not you’re hired for a job? Yes, really. While an employer can’t access your credit score, they can pull your credit report (which makes up your score).

While an employer weighs many factors before hiring, your credit report could potentially be one of them. You might be thinking, “How intrusive!” But it’s important to remember that a credit report can say a great deal about a person. For example, let’s say you have a history of late/missed payments. If that’s the case, your employer might not think you’re the most trustworthy candidate — especially if the role involves handling money.

How to Improve Your Score

Now that you know why it’s essential to have a good credit score let’s focus on how to achieve one. Here are a few ways:

1. Use a Secured Credit Card

A secured credit card is a great way to improve your credit score. While it functions similarly to a traditional credit card, a secured card requires a deposit.

The deposit, which becomes your credit limit, acts as a safeguard to the issuer. If you don’t pay your bill, the issuer can take the money from your deposit. Because of this, it’s easier to get approved for a secured card if you have poor credit.

There are many different secured cards available with different deposit minimums and maximums. So make sure you choose the right one for your specific financial goal.

2. Understand Your Credit Score

Five factors determine your credit score: payment history, credit utilization, age of accounts, credit mix, and new credit inquiries.

Your payment history makes up 35% of your score. Your credit utilization is next, accounting for 30% of your score. Credit utilization is the amount of credit you’re using divided by the total amount of available credit. Experts recommend keeping your utilization ratio at no more than 30% to improve your score.

The age of your accounts makes up 15% of your score; credit mix and new credit inquiries make up 10%. While these percentages aren’t as high as the two items above, they’re still factors to pay attention to.

3. Review Your Report

First, understand what a good credit score is. A good credit score is considered anything between 690 and 719; scores below 690 are considered fair or foul. After you better understand what makes a credit score, go ahead and pull your credit report.

Now spend some time reviewing your credit report to see what’s impacting your score. For example, do you have a history of late payments? Have you applied for multiple credit cards in the last month, which created new inquiries? Or maybe there are errors on your report that are lowering your score. If that’s the case, make sure you report those errors immediately.

If your poor habits affect your score, figure out how to change them. That might mean automatic scheduling of payments, so you don’t have to remember to pay a bill. You should also consider consulting with a financial expert to help.

A good credit score is crucial to achieving your personal and financial goals. If your score is on the lower side, now is the best time to do something. Thankfully, the tips above can help.