How can your credit score impact your financial well-being?

• A. A higher credit score guarantees you will never be denied a loan.
• B. Your credit score only affects your ability to open a checking account.
• C. A higher credit score can help you qualify for lower interest rates on loans, saving you money over time.
• D. Credit scores have no impact on your ability to rent an apartment.

Answer: (C)

Verified step by step guidance

1. Understand the concept of a credit score: A credit score is a numerical representation of your creditworthiness, based on your credit history. It is used by lenders, landlords, and other entities to assess the risk of lending or renting to you.
2. Recognize the impact of a higher credit score: A higher credit score indicates lower risk to lenders, which can help you qualify for loans with lower interest rates. This can save you money over time as you pay less in interest.
3. Clarify misconceptions: A higher credit score does not guarantee loan approval, as other factors like income and debt-to-income ratio are also considered. Additionally, credit scores can impact your ability to rent an apartment, contrary to the statement in the problem.
4. Identify the correct answer: The correct answer highlights the financial benefit of a higher credit score, specifically the ability to qualify for lower interest rates on loans.
5. Apply this knowledge: Use this understanding to manage your credit responsibly, such as paying bills on time, keeping credit utilization low, and monitoring your credit report for errors.