Why is maintaining good credit important?

Maintaining good credit is crucial because it enables individuals to secure lower interest rates on loans and credit products. Lenders assess creditworthiness based on credit scores and histories, which reflect how reliably a person has repaid debts in the past. A higher credit score typically results in more favorable terms, including lower interest rates. This can lead to significant savings over time, especially for large loans such as mortgages or auto loans. Lower interest rates mean borrowers pay less in finance charges, making it more affordable to carry debt and manage monthly payments.

While improved job prospects and increased income can be influenced by various factors, they are not directly tied to credit scores. Similarly, tax liabilities are governed by tax laws and personal income, making credit maintenance unrelated to tax reduction strategies.