⌛ Video Length — 00:01:39

Lesson Summary

As discussed in the previous lesson, The U.S. economy is built upon credit, and ultimately, credit boils down to one thing…

Trust.

When a bank gives you a credit card or a loan, they do so because they trust you to pay them back, and one of the most common ways people build that trust is by using credit cards, opening loans and paying them back on time.

By demonstrating that you can pay back the money you borrow, in small or large amounts, you are establishing your credit history or credit worthiness which is reflected by your credit score. Your credit score is a grade for your financial performance, just like the ones you get at school. An good score represents high amount of trust, while a bad credit score can hammer you into missing out or paying more.

It goes without saying credit scores have become such an important part of our financial lives. That’s why in today’s lesson, we’re going to discuss why having good credit is so important and how it pays to keep track of yours.

Here are 4 reasons credit is important.

• Good Credit Saves You Money- lower rates, lower deposits, down-payments
• Helps in Emergencies
• Creates new possibilities – buy a home, new car, job, insurance
• Leverage – free travel, investments, rewards, and perks

Now that you know about the importance of our credit, let’s talk about your credit scores