Why Your Credit Health Matters And How It Affects You At Different Life Stages

This is a guest contribution by Credit Bureau Singapore, as part of a partnership between CBS and AMTD PolicyPal Group (PolicyPal and ValueChampion), in line with our mission to empower people with financial knowledge and help them attain financial wellness.

Your credit health influences your ability to secure loans and financial opportunities and plays a pivotal role at different stages of life. Understanding the importance of credit health as early as possible is crucial for financial stability in the long term. 

Why Your Credit Score Is Important As A Young Adult

As a young adult embarking on your first job and receiving your first pay check, this is the beginning of your money management journey where you can finally put all the good financial habits you’ve learnt during your educational years to the test. 

Establishing a solid credit foundation is paramount as laying the groundwork for a positive credit history during the early stages of your financial journey sets the tone for future financial endeavours. 

Applying for your first credit card and learning how to pay your bills timely is great practise when cultivating good credit health. This helps to build a good foundation to your credit reputation which is vital in the future for obtaining loans or even securing employment.

Related: Compare Credit Cards for Young Adults

Why Your Credit Score Is Important As a Working Professional And Homeowner

As you progress in your career and grow your income, you may start to consider purchasing your first home. Your credit health is a very important deciding factor when it comes to homeownership. 

Banks and lenders look out for a good credit score when determining how much mortgage a lender can take on. A higher credit score often translates to more open doors to better mortgage financing options (lower interest rates), which could have you thousands of dollars in the long run. 

Related: Compare The Best Home Loans

Why Your Credit Score Is Important When Marriage Planning or Starting a Family

For couples who are intending to settle down and start a family, credit health can once again play a critical role.

Planning a wedding comes with a lot of big ticket expenses. Your pre-wedding shoots, venue reservations, catering services as well as the many other miscellaneous costs that comes with organising a wedding can add up very quickly. 

For many couples, a good way to finance a wedding is to take out a personal loan and slowly pay it down monthly after the wedding is over. The better your credit score, the more favourable terms you can get on a persona loan.  

For wedded couples who are thinking of having children, you may be looking to take on a car loan to accommodate for your growing family, or even seek out an education loan to finance your children’s tertiary education. 

A strong credit profile remains incredibly important when starting a family, as this may be a period in your life whereby you are juggling multiple large loans at once. Couples where both partners actively manage their credit responsibility may find that their joint financial goals are much more attainable.

Related: Should You Take Out An Education Loan or Personal Loan For Your Higher Studies?

Why Your Credit Score Is Important During Periods of Mid-Career Advancement

Mid-career professionals may encounter opportunities for career advancement that involve relocation, further education, or investment in business ventures. A healthy credit history facilitates smooth transitions during these stages, providing the financial flexibility needed to seize new opportunities. 

In Singapore, the recruitment sector is increasingly recognising the assessment of creditworthiness as an indicator of both responsibility and reliability, even if the role is in a non-financial sector. Having good credit health will bode well for you if your future employer requests for any credit statements during background screenings prior to on-boarding.

Related: Salary Increments and Pay Raises in Singapore – How Much to Expect in 2024 and the Near Future

Why Your Credit Score Is Important During Retirement and Legacy Planning

Even in retirement, credit health remains pertinent, especially if you have a desire to leave a financial legacy for your heirs. 

Maintaining a good credit history is beneficial for retirees who may need to access credit lines for unexpected expenses or healthcare needs. Eventually, having a credit history will also have a positive impact on estate planning, making it easier for beneficiaries to manage assets and navigate financial responsibilities. 

Related: 6 Retirement Planning Mistakes To Avoid

Conclusion

In conclusion, the importance of credit health extends across various life stages, shaping financial opportunities and stability. 

From the early steps of building credit in adulthood to navigating major life events such as homeownership, marriage, family planning, and retirement, a positive credit history can significantly impact one’s financial trajectory. By understanding the role of credit at different life stages and actively managing it, individuals can pave the way for a more secure financial future.

For more information about maintaining good credit health, follow CBS on Facebook or Linkedin.

Read More:

• Why Is A Credit Report Important And How Can It Impact You?
• 5 Common Credit Mistakes to Avoid Making
• 4 Tips on Building Your Credit Score in Singapore
• 5 Foolproof Ways to Improve Your Credit Score
• 4 Key Questions To Ask Yourself Before Signing Up For A Credit Card

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