Your credit score is now more important than ever before. Listed below are a few reasons to keep your credit in good standing.
Everything Costs More
Unfortunately, if you have a poor credit score, everything will cost more. Try applying for a car loan. While there are sub-lenders willing to grant a loan so long as you have a full-time job and a checking account, their interest rates will be very high. Then there’s the car’s insurance. Many of the premier insurance companies no longer accept individuals with poor credit. The good news is that there are other companies that still provide cheap (car/auto) insurance with bad credit. Getting a mortgage, a personal loan or even utilities turned on will all cost more in the end.
Missed Opportunities for Employment
The impact of poor credit extends well beyond getting an approval for a loan. It now can play a role in the decision-making process of a company on whether or not to hire you. Even if you are a good candidate for a position with a business, your poor credit score can prevent you from landing the job.
When you have a low credit score, the banks view you as reckless and irresponsible with money. A few late payments here and there can definitely change your life for the worse. As a high-risk borrower, getting approved for a home loan can become incredibly difficult, so much so that you might even simply stop trying. While you can get an FHA loan with a credit score of 580 or higher, the amount you can borrow is limited. It can also prevent you from renting an apartment or a home since Realtors run a credit check at the start of your application process.
Can Turn a Minor Problem Into a Major Issue
When you have a bad credit score, acquiring any type of loan or credit is virtually impossible. You either need a large deposit to get a credit card with a small available balance or you are left to the mercy of a payday loan with super high interest attached. This can prevent you from fixing your car or paying a late medical bill.
Affect Your Relationship
Having a poor credit score can put you at risk of remaining single. More often than not, these days couples care quite a lot about the state of their partners’ finances. Remember that, once you tie the knot, your poor credit score is now your partner’s problem too.
Ways to Raise Your Score
On the upside, your credit score is not something that remains the same. You can slowly repair it and raise it to a good standing. However, this is not something that magically happens in just a few months. It may take a few years to get it to where you want it. Reducing your debt and paying your current bills on time are two ways to start moving your credit score up slowly. Ideally, you want your credit card balances to be less than a third of the credit line you were issued. Since your debt-to-income ratio is a huge factor in the loan approval process, you need to start paying off some of your debt and only keep open a couple of credit cards, a car loan, and a mortgage.
Spending Your Money
Chances are pretty good that, when it comes to managing your money, you need help. Thankfully, creating a budget and reeling in your spending are two successful ways to reverse your overspending habits and start using your money wisely. Small daily purchases can consume much of your disposable income and take away from the money you have available to pay your bills.
While your credit score seems like just a three-digit number, that number plays a huge role in your financial future. For this reason, it’s vital that you do everything possible to improve your credit score.