The Importance of A Credit Score by Credit Virgin
If you ever plan on renting an apartment, getting a job, buying a car, or buying a house you should watch this video. But if you plan on living in a cave for the rest of your life, this is probably a waste of time. We’ll start by talking about why a credit score is so important! John and his friends will be our example. John’s best friend is Mark, Mark and John have been friends for years. John has loaned mark money quite a few times and mark always pays him back the very next day. So if Mark ever needs to borrow money, John won’t hesitate to lend it to him because he knows mark will always pay him back.
John has also loaned money to his other friend Luke, but Luke never seems to pay him back. John gave him a couple chances because they were friends, but now there’s no way John is loaning Luke any more money.
John’s two friends are like a good credit score and a bad credit score. Mark represents a good credit score and just like someone with a good credit score, John would be happy to loan mark money. On the other hand, Luke represents a bad credit score, and like someone with a bad credit score John will not loan Luke anymore money.
Now we’ve looked at both extremes, but what if you don’t have a credit score? Well, that would be like John loaning money to a total stranger money. The total stranger could be an awesome person, who pays him back almost immediately, or he could be a total crook that just wants to steal John’s money. John has no way of knowing, so he would be very hesitant to loan a stranger any money. In conclusion, when someone checks your credit score you’ll either be put into, the Mark category, the Luke category, or the total stranger category. You want to be like Mark so people will loan you money, and the only way to be like mark is to start building your credit score. In the next video we’ll see how interest plays into the equation