It can help (or hurt) your application

When you apply for loans or other credit, the lender will look at lots of different factors to determine whether they give you the green or red light. Your credit score provides a snapshot of how risky you are as a borrower, so it’s an important factor.

If you have a low score you will be seen as a higher risk, and vice versa; The higher your score, the more reliable you seem.

Put simply, if you have a strong credit history, a lender is more likely to approve your application.

It can help you save on interest rates

Lenders often use interest rates as a way to protect themselves against risk. This is called risk-based pricing: the riskier the borrower, the higher the interest rate.

This means, while a lender might still offer someone with a low credit score a loan, they might charge a higher interest rate on that loan.

In other words, if you have a high credit score you will likely strike a better deal and a lower rate when you apply for loans or credit.

It can bump up your borrowing limit

Your credit score can also impact your borrowing limit. We, just like other lenders, are unlikely to want to lend a lot of money to a borrower who is unlikely to repay it.

So if your credit score is higher, you may be offered a higher borrowing limit (as in a higher loan amount or credit limit). If your score is lower, you may be offered a lower limit.