Why Do Credit Scores Matter?

Your credit score is a three-digit number, between 300 and 850, that informs how likely you are to repay a debt based on your credit history. There are three main credit bureaus, Equifax, Experian and TransUnion, that collect information about your credit history to inform your score. 

Your credit score plays a big role in the financial aspects of your life. Whether you’re looking to buy your first home, get a car loan, or even grow your career, your credit score can quietly open (or close) those doors.

Even a small change in your score can impact whether you qualify for a loan and what interest rate you get. And that matters, because a higher rate means you’ll end up paying more each month toward interest rather than lowering your debt. The longer you hold on to the debt, the more you’ll pay.

Here are a few key reasons why your credit score matters:

1. Access to more affordable loans and credit 

A strong credit score means you’re likely to qualify for loans and credit with lower interest rates or lower down payment requirements. Over time, this can save you thousands of dollars on big expenses like mortgages, car loans, and personal loans. Lower interest rates make borrowing less costly, giving you more freedom to allocate funds toward the things that matter most to you. 

Example: Say you're buying a $300,000 home. With a higher credit score of around 760, you could qualify for a mortgage rate of about 6.5%. In contrast, someone with a lower score near 620 might pay around 8.2%. Over a 30-year term, that difference in rates means you’d save roughly $106,000 in interest payments, significantly lowering your overall cost. That’s money you could use to build your future. Use Zillow Home Loans’ BuyAbility tool to find homes within your budget. 

2. Better chances of getting new credit approval

A good credit score doesn’t just unlock better rates — it also improves your odds of getting approved in the first place. Whether you're applying for a mortgage, a new credit card, or even a phone plan, your credit score tells lenders and service providers how financially reliable you are. The same goes for renting: landlords often check your credit to decide if you're a creditworthy tenant.

A solid credit score can give you a leg up in a competitive rental market, helping you secure that dream apartment or rental home, sometimes without needing a co-signer or extra deposit. It’s a key part of standing out from the crowd.

Example: Let’s say you’re eyeing a great apartment in a hot neighborhood. With a credit score above 600, you’re more likely to get approved quickly and move in with fewer hurdles. You can build your credit by reporting your on-time rent payments through Zillow Rentals. 

3. Higher credit limits

When your credit score is in good shape, lenders are more likely to trust you with higher credit limits. That means more borrowing power and greater financial flexibility, whether you’re consolidating debt, covering an emergency expense, planning a big purchase, or even funding the early stages of a business idea.

A higher limit also helps your credit utilization ratio (how much credit you’re using versus how much you have available), which can further boost your score and create a positive cycle.

Example: Let’s say you’re approved for a credit card with a $15,000 limit instead of $5,000. That extra cushion gives you more room to manage your cash flow, build your business, or handle unexpected expenses without maxing out your card.

4. Career opportunities

Some employers, especially for roles that involve finances or sensitive information, check credit reports during the hiring process. A strong credit score shows that you’re responsible and trustworthy, which can help you stand out. It might even be the deciding factor between you and another qualified candidate.

5. Better insurance rates

In many states, insurance companies use credit scores to help set your rates for home, auto, or renter coverage. A better score can lead to lower premiums, saving you serious money over time. While not allowed in every state, where it is permitted, a good score can be a quiet advantage. 

6. Stronger negotiating power

With a good credit score, you’re in a better position to negotiate more favorable terms on loans, interest rates, and service agreements. You may also be able to avoid paying upfront deposits for things like utilities or phone plans. That kind of flexibility can reduce financial stress and keep more cash in your pocket.

7. Emergency preparedness

Life doesn’t always go as planned — whether it’s a surprise medical bill or unexpected car trouble. A strong credit score can give you access to funds in a pinch, offering a financial cushion when you need it most. It’s peace of mind knowing help is available when things get tough.

8. Builds wealth and stability

Good credit is a foundation for long-term financial growth and peace of mind. It allows you to invest in things that build wealth, like buying a home, starting a business, or paying for education. Over time, these opportunities can help you create a more stable and independent financial future.

9. Plan for the future

Your credit score is more than just a number. It’s a gateway to opportunities, security, and freedom. By understanding its importance and taking actionable steps to improve it, you can build a brighter, more empowered financial future. 

Remember, progress takes time, and every small decision counts. Start today, and keep focused on your long-term goals. Whether it’s owning your dream home, landing a great job, or building wealth for your family, your credit score can help get you there.