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Perhaps you, like many of us, find credit confusing. Maybe you aren’t familiar with credit and its uses — perhaps you have never had access to beneficial information, getting conflicting advice, or are new to our financial system.

While we all know that a credit score enables us to borrow money to purchase goods or services we need now and pay that money back in the future, we might not know exactly what a lender looks for to gauge whether we will pay back the money on time. And we may not always recognize the actual cost of borrowing. For example, one way lenders gauge whether we are a safe bet when we apply for a personal loan is by using our credit score as a measure. But what is a credit score exactly?

A credit score is a three-digit number between 350 and 800. Your credit score is calculated using several different criteria that include your payment history, the amount of debt you have, and the length of your credit history.

If you have never used credit, you don’t have a credit score, but there’s always the chance to build one. Having a good credit score is a vital pillar of financial health. Below, we give you three reasons why it’s crucial to maintain a good credit score:

#1 Better Interest Rates:  When you borrow money to purchase a home, a car, or cover an emergency, you pay interest. A higher score usually means a lower interest rate, which means you can spend a lot less spend over time for the loan. If you need to build or increase your credit score, we can help you through our Credit Builder Loan. It has helped people build a healthy credit score with or without credit histories. Interested in paying less for your financial goals? Existing customers can apply for a personal loan with us today!

#2 Access to a Home: Whether you want to purchase your first home or rent an apartment, your credit score may determine whether you can buy or rent the home of your dreams. Typically, the higher your credit score, the more likely you are to have access to an affordable mortgage.  Apply for a personal loan with us, our Credit Builder Loan, and get started on that dream home.

#3 Better Access to Insurance: We need insurance for all sorts of things, like our car, our home, and even our cell phone. Insurance companies use our credit scores to approve our application and determine our monthly premiums: the higher your credit score, the lower your monthly premium. When you have a higher credit score, you can save a lot of money. Each year, insurance providers check your credit score to determine what rates they will charge the following year. So when you apply for a personal loan with us, we can help you keep your credit score high and your premiums low. It’s that simple.

Need more reasons to apply for a personal loan? You can find them here. If you still have questions about building credit and its importance, we encourage you to contact our partners at Ariva Inc. and GreenPath. They provide free financial counseling sessions and can point you to the products that best suit your needs. Don’t know where to start? Learn more about credit and other financial health-related topics from our partners at Greenpath Financial Wellness.