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While many individuals see credit as an essential part of personal finance, some avoid credit cards and loans altogether. Although avoiding debt is admirable, building credit is critical for various significant purchases and life events. Building credit responsibly is an excellent way to ease the path towards homeownership, financial stability, and more. Here are three reasons why you should care about building credit.

Building Credit Can Help With Large Expenses

One of the most commonly-mentioned benefits of good credit is that it can help when it’s time to buy a home or car, but this argument is often left at that. More precisely, good credit can help borrowers secure loans with lower interest rates. This is applicable when buying a home, buying a car, or paying for higher education with student loans. On the flip side, poor credit can make it difficult (if not impossible) to qualify for loans for these expenses. Many loans that people can be eligible for with low credit scores have astronomical interest rates, which means that borrowers end up paying significantly more money for the same products. Building credit before making one of these large purchases can help borrowers qualify for loans with more favorable terms.

Employers, Landlords, and Others May See Reports

Depending on where you live, your employer may be able to request a modified credit report from credit bureaus during the hiring and screening process. These modified reports are only available in some states, and many employers do not take advantage of them. However, a low credit score can still have the ability to factor into hiring decisions when you apply for jobs. Landlords often take credit scores into account when vetting new tenants, and utility companies may also consider them. For individuals with poor credit, utility companies may require a security deposit before starting service.

Take Advantage of Credit Cards

Finally, building credit allows you to access more opportunities when it comes to credit cards. Many credit cards offer perks such as cash back incentives, airline miles, loyalty points, and more. Often, bigger perks are offered to those with a long credit history and a good credit score. Perks aside, using a credit card has a slew of benefits when used responsibly. They are ideal for spreading out large purchases and managing monthly finances, and they can be a valuable tool to avoid theft and fraud. Building credit can be an intimidating prospect for beginners, but a good credit score is invaluable for many major life experiences.