How Our Credit Scores Affect Our Lives

There are a lot of advantages to having good credit. A good credit score means you can get a car without a cosigner, get a loan with good interests rates and the same with credit cards. Many people don’t understand the importance of having a good credit score until it’s too late.

It is very important to understand how credit scores affect our lives. People often take credit for granted then find themselves in holes they have a difficult time digging their way out of. You are judged by your credit score. It may seem unfair, but that’s the way it is. No one wants to take a chance on you if they believe you aren’t going to pay your bills. If you have a number of defaults or charge-offs on your credit report, your score will plummet. The repercussions are severe. Here is a listing of what can happen if you have a low credit score:

• High interest on credit cards/loans – If you are deemed a risky borrower, the credit card company is going to charge a high-interest rate. This could actually lead to more trouble and landing you in even more debt.

• Not being approved for a loan – If you have bad credit, the likelihood of you being approved for a loan is slim. While options exist such as payday loan alternatives for bad credit, the interest rate will be higher and loan amounts capped at well below $5000, usually in the $1000-$2000 range.

• Housing application denial – Most apartments managers and landlords make a decision on whether or not to rent to you based on credit score. If you have a poor credit score, they may not deny you, but you will definitely have to pay a hefty security deposit.

• Added security deposit – This is the same with utility companies. They also check credit scores and if yours is low, they will tack on a security deposit.

• Denied employment – Some employers, depending on the job, will look at your credit history. If it is filled with bankruptcies, high debts, and bills, they may deny you.

And this is just a short list of what can happen. The same applies to getting auto insurance. If your credit history is poor, your premiums could be very high.

If you are ready to get your credit back on track, there are ways to do it. Bad credit repair companies claim that they can help you. But beware, there is only a handful out there that are legitimate. You can go to websites like wwww.annualcreditreport.com or www.creditkarma.com to get free access to your credit reports.

Once you find out what you’re dealing with, you will need to follow through on the necessary steps to build good credit. The first thing you should do with your credit report is scrutinize it for inaccuracies. If you find them, dispute them. If you have some small bills on your report, pay them off as soon as possible. This will tick up your credit score. People have no idea how much they can raise their score by paying off 3 or 4 bills under $100.

Going forward, make an effort to pay your bills on time. And don’t take on any additional credit. Concentrate on clearing up your current credit. Once you start paying off bills and keeping things current, you will see your credit grow.

from Finance Girl http://www.financegirl.co.uk/how-our-credit-scores-affect-our-lives/