It’s important to build and keep good credit for a wide variety of reasons. Those who make smart decisions regarding their credit get ahead in life more quickly than those who don’t. That’s not to say that anyone with bad credit can’t fix their mistakes, but it’s simply easier and much less work for an individual who maintains a good credit score. Having bad credit makes certain things very difficult to do. Here are some examples to keep you motivated to keep your credit score at a decent spot.
Obtaining A Loan:
When attempting to obtain a loan, the bank or loan office runs the individual’s credit through their system first. If the credit score is too low, the individual will be denied the loan, often regardless of how much income the individual brings in on a monthly basis. If the credit score is high enough to be accepted, but still a low number, the interest rates could be sky high.
Buying A Car:
Unless the individual is bringing cash to the auto dealership to completely pay for the vehicle up front, the dealership will need to see that person’s credit. A loan will be required in order for the person to purchase the vehicle and drive it off of the car lot. If the individual has poor credit, the dealership can deny their request and in that case they will not be able to get the vehicle they want.
Buying A House:
This type of purchase also requires a credit check. The lender wants to know what an individual’s history looks like in order to see if that person can be held accountable for repayment. Many mortgage lenders have high standards when it comes to credit scores because mortgages are large sums of money to be lending out. A poor credit score indicates the person is unreliable when it comes to their financial responsibilities. Check out HUD’sfor more info on buying a home
Getting A Cell Phone:
This applies when going through cell phone companies that require a contract to use their service. They require their customers to sign one or two year contracts and use their customers’ credit scores to determine whether or not they can be upheld to those contracts. If they feel an individual cannot be trusted to pay them in a timely fashion, they require a down payment, which is usually a hefty amount.
Obtaining Car Insurance:
Car insurance companies put a lot of stock in their customers and spend a lot of money protecting them and their assets. Therefore, if a potential customer comes in, they check their credit to make sure that the individual is going to be a sound investment. The poorer the credit, the higher the insurance rates the customer will have to pay. However, there are car insurance companies that are specialized in helping people with less than perfect credit.
Getting A Job:
Some employers will run credit checks on potential employees to see how trustworthy they are. Depending on the type of employment an individual is seeking, things like bankruptcy and large amounts of debt can cause someone to be turned down.
A bad credit history makes all of these things difficult and more. Between higher down payments and higher interest rates, it actually costs an individual more to have poor credit than it does to have kept their credit score in good standing. It causes unnecessary road blocks in one’s life. This is why it’s so important to ensure that debts are taken care of in a timely fashion.