Virtually everybody knows that it is good to have an excellent credit score and terribly bad to have a bad one as it can affect your life negatively in numerous ways – financially and personally. However, the real question is, do you actually know everything you should know regarding your credit score?
Do you know what constitutes a good credit score and what could endanger your credit score? Well, if your answer is No, then be rest assured that you are part of a large crowd that does not really understand the basics of credit score and how they are calculated.
Below, is a list that aims to help you understand credit score and the effects of having a good and bad one.
First, we will start by showing ways a bad credit score can affect you in your daily life and why it is very important to have a good credit history and why you should not take it for granted either.
How Can a Low Credit Score Affect my Everyday Life?
Your credit score is used by a countless number of people including your landlord, potential employers, your banks, insurance companies, and lenders who evaluate your creditworthiness. This means your ability to secure a loan, buy a new apartment, or even get a new job.
Applying for a Job
Your chances of securing your dream job could be cut short by a bad credit score. Your employer may interpret your bad credit score as a sign of irresponsibly and therefore may not see you as a great fit for their organization. Keep in mind that your potential employer has the right to demand a credit check.
Applying for a Loan
This is probably one of the biggest areas where your credit score is significant. A bank or loan agency may decline your loan application or decline your request if you have a bad credit score. Asides from affecting your chances of getting new credit, a bad credit score can also affect how much credit you can get and the applicable interest rate.
Renting a Vehicle
Renting a car is quite different from applying for new credit, however, the moment you sign the dotted line on that application paper, you are giving the permission to access your credit information. The main reason why they may look to check your credit history is to determine what kind of risk they may be taking by loaning you their property, which in this case is a car.
If you have a low credit score, they may see you a high risk and thus may not be too interested in allowing you lease their car.
A potential landlord will also be very interested in checking your credit history as they need to understand your ability to pay them. Bad credit rating can make them consider giving the house to someone else – possibly with a much better credit score.
How to Improve Your Credit Score
If you are battling with a poor credit score or simply looking for how to boost yours, then attempt to follow these two easy tips listed below:
1. Keep your credit report in order
You can improve your credit rating with a number of options such as ensuring t your accounts are kept open even when they are not directly linked to improving your credit utilization ratio.
2. Pay your bills promptly
Overdue payments can hurt your credit report for years. Ensure you are able to meet deadlines to avoid black marks on your credit history.
If you have an issue with any billing on your credit report, ensure you pay them off before looking to contest them. Defaults are hard to get off your credit report so try as much as possible to stop them from happening in the first place. If you have failed to manage your credit accounts, you can still apply for bad credit loans and get approved.