It is a fact that the entire economy runs on credit. If you have a student loan, are planning to get a mortgage loan, or if you plan to buy a car, there is a credit company eager to give you a loan. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay. However, your creditworthiness in the eyes of the lender must be in good standing to get a favorable approval. Creditworthiness is defined by your credit score and usually determined by a scale of hundreds, each category being a range that is assigned a label such as bad, fair, and good. Kind of like the grades you receive on a test based on your percentage. Essentially, it is a measurement tool that measures your repayment liability and acts as an indicator of how effectively your debts are being repaid. If you have higher debt and have difficulty making monthly payments, you will find it difficult to get a credit card that carries a low interest rate. And when you are approved, the bad credit holder will be instructed to make a secure deposit to get a credit card. Building Your Reputation for Trustworthiness Now let's talk about how you build credit history. You essentially take out a loan, using your credit card or paying your bills, but the key is to repay all your credit on time. When you are good at paying everything back on time, banks will reward you. Being responsible and punctual with payments will not only give you relief, but will be a long-term advantage as you will maintain good financial habits and a trustworthy status from banks. The following reasons highlight the importance of building and maintaining a healthy credit rating. Buying a Home Owning a home is one of life's greatest accomplishments, but it's one of the most difficult if you have bad credit. The recent recession has led to foreclosures, including the housing crisis, although there has been stability in the real estate industry, lenders are still cautious when it comes to loans with strict benchmark requirements that make it difficult to apply for a loan. If you plan to rent, know that a credit score is part of the requirement. A defaulting credit score is automatically denied and perhaps the rental company will require a higher deposit including adding a guarantor. This methodology is often used by rental agencies when deciding your ability to pay your monthly rent. When you're ready to buy a home, be prepared to disclose all of your debts and investments. With an excellent credit score, mortgages usually come with low interest rates and a longer payment plan. This translates into huge savings and the ability to afford a larger home. Buying a CarMany people choose to finance their car. This type of loan is smaller than a home equity loan, and even people with poor credit still get approved. However, bad credit results in a larger down payment and high interest rates. The loan will be expensive for you because you will end up paying much more than a person with a high credit score. After purchasing your new vehicle, you will need an auto insurance policy. Insurance companies often run credit checks when calculating your premium, which means you save more when you're in good standing. Getting a better paying job Depending on your career field, employers have added the process of background checks including your credit rating which can sometimes hinder the..