Why you should build your credit

Why you should build your credit

When you apply for financial products like credit cards and loans, lenders will often review your credit reports and credit scores to help with their decision. Your credit history can help them determine how risky it is to lend to you.

If you have low credit — or no credit at all — you may receive less-generous borrowing terms, such as a lower credit limit or a higher interest rate. If you don’t pay off your balance on time and in full every month, then a higher interest rate can end up costing you a lot more money over time.

You could also have your credit application denied, which might force you to seek out other lenders with worse terms and interest rates.

By building good credit, you may be able to save money in the short term and eventually get approved for bigger items, such as a home or car. To put it another way, building credit can make it easier to live the kind of life you want.