The finance world is divided on the importance of credit scores. Some people deliberately use credit to their advantage, while others dismiss credit history as irrelevant or even harmful.
I’m firmly on the pro-credit side. Your credit history can be an asset, so it makes sense to work on improving it.
Also, checking your credit score is easy and often free. You can use services that provide a free credit score to see where you stand.
As context for why our credit matters right now: we’re beginning the process of buying a house. Since both of us are self-employed, qualifying for a mortgage is more complicated. One key factor lenders examine is credit history. We also value strong credit because we use rewards credit cards that offer valuable benefits.
Why your credit score matters
Many people don’t know their credit score and have never reviewed their credit report, even though free credit scores and free online reports are readily available. That’s a serious oversight.
Your credit score and credit report are tools you can use to your advantage. With the right habits, you can achieve a strong credit profile and enjoy the benefits that come with it.
A higher credit score usually means lower interest rates on loans, which saves you money. For example, someone with excellent credit might qualify for promotional offers like a 0% auto loan, while a person with poor credit could be quoted interest rates as high as 24% for the same loan. In extreme cases, poor credit can lead to loan denials, higher fees, or larger required deposits because lenders view you as higher risk.
In short, a good credit score can make many aspects of financial life easier and less expensive.
In future posts I’ll explain what constitutes a good credit score. For now, the focus is on why credit matters.
When your credit score may be checked
Even people who rarely borrow money can find their credit checked more often than they realize. Credit checks occur in many situations beyond loan applications.
Home and auto insurance – Some insurers use credit information to help determine rates. If your credit is poor, you may pay higher premiums because insurers may consider you a greater risk.
Employment – Certain employers, particularly in financial services, chemical, and defense industries, may request permission to review your credit report as part of the hiring process.
Renting a home – Landlords commonly check applicants’ credit histories to evaluate their reliability. A weak credit history can lead to an application denial, a requirement to pay multiple months’ rent upfront, or a request for a co-signer.
Credit cards – If you want a credit card with strong rewards or favorable terms, a higher credit score improves your chances of approval and access to the best offers.
Loans (mortgages, auto loans, etc.) – Lenders thoroughly review your credit and financial history before approving loans. Since homeownership and vehicle ownership involve significant ongoing expenses, qualifying for the lowest possible interest rate is important.
Credit Sesame review
I once signed up with a credit service that advertised heavily and later found unexpected charges on my account. That experience taught me to be cautious when a service claims to be free.
Credit Sesame, however, is a genuinely free option for monitoring your credit. It does not require a credit card, so there’s no risk of being billed later without noticing. Credit Sesame provides a score based on Experian’s National Equivalency model; most lenders use FICO scores, but the two are generally comparable and give a useful indication of your standing.
Credit Sesame earns revenue by recommending loan and credit card offers that may suit you. If you click through and apply, they may receive compensation. Importantly, checking your score through Credit Sesame uses a soft inquiry and will not hurt your credit.
If you want to track your credit for free and get a snapshot of where you stand, Credit Sesame is a straightforward, no-cost option.
How often do you check your credit score? Are you actively working to improve it? Why or why not?