A credit score is a numerical representation of an individual’s creditworthiness, and it is important because it is used by financial institutions, such as banks and credit card companies, to determine the risk of lending money or extending credit to a person. A higher credit score indicates a lower risk, and as a result, a person with a high credit score is more likely to be approved for loans or credit cards with favourable terms, such as lower interest rates. On the other hand, a lower credit score indicates a higher risk, and a person with a low credit score may be denied loans or credit cards, or maybe offered less favourable terms.

A credit score is important for several reasons:

1. Determines creditworthiness: A credit score is a numerical representation of an individual’s creditworthiness and is used by financial institutions to determine the risk of lending money or extending credit to a person. A higher credit score indicates a lower risk, and as a result, a person with a high credit score is more likely to be approved for loans or credit cards with favourable terms.
2. Access to credit: A high credit score can lead to better loan and credit card terms, lower interest rates, and a higher likelihood of approval, while a low credit score can make it difficult to borrow money or access credit.
3. Lower interest rates: A person with a high credit score is more likely to be offered lower interest rates on loans and credit cards, which can save them thousands of dollars in interest charges over the life of the loan or credit card.
4. Better rental and employment opportunities: A good credit score may also be important when trying to rent an apartment or get a job, as many landlords and employers check credit scores as part of their screening process.
5. Insurance rates: Some insurance companies may check credit scores when determining the rates for insurance policies.
6. Cost of living: A good credit score may also help with the cost of living in general as you can get better deals on utility bills, mobile phone contracts, and other daily expenses.
7. Peace of mind: Having a good credit score can provide peace of mind, knowing that you will have access to credit when you need it and be able to take advantage of favourable terms if the need arises.
8. Long-term financial stability: Maintaining a good credit score over time can help to ensure long-term financial stability by making it easier to borrow money when needed and by keeping the cost of borrowing low.

Bottom line:

In summary, a credit score is important because it is a widely used measure of creditworthiness that determines a person’s ability to borrow money or access credit. A high credit score can lead to better loan and credit card terms, lower interest rates, and a higher likelihood of approval, while a low credit score can make it difficult to borrow money or access credit, and result in higher interest rates and a higher risk of loan or credit card application being denied. It also can affect many other aspects of life such as getting a rental agreement, getting a job, and even opening a mobile phone contract.