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Why You Should Know Your Credit Score

Ask Savvy: Do I Really Need to Know My Credit Score?

This excellent question was posted by lemonfizz in my Ask Savvy group: I check my credit reports regularly for errors, but I've never paid extra to find out my credit score because I don't have any plans to take out a mortgage or buy a car (I live in the city and rent). Is there any other reason I'd need to know my credit score?

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The reason you need to have a good credit score is so that you can qualify for the best interest rates for things like homes and cars, but also for credit cards. Even if you’re not in the market for a new vehicle or a new abode, your credit score should still be on your radar.

Your credit score is the biggest indicator of your overall financial health, and when your credit score is generated the credit bureau running the report identifies reason codes. These reason codes are what you should be paying attention to — they tell you what the reasons are for any dings in your score.

While you’re not in any rush to borrow any time soon, attending to the reason codes now will allow you to borrow more cheaply when you’re ready to make a bigger purchase or require additional credit. So, if your reason codes are telling your credit to debt ratio is too high, you can work on getting that ratio down so that you get the best interest rates when the time comes. For now, you can treat checking your credit score like getting a physical — you just want to know you're doing everything you can to be financially healthy.

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