How Do Bad Credit Scores Affect Your Entire Life Negatively?
Even though you may not think about it on a daily basis, your credit score affects your life more than you probably thought. If your credit score is good to great, then you don’t need to think about it much. On the other hand, if your credit score is below the 700 mark, you will want to take action to get it up to a healthy level.
Your credit score is based on several factors, which show others how you handle the money that you borrow.
- Do you pay it back on time?
- How often do you borrow money?
- How long have you been building up your credit history?
All of this can be seen and evaluated by a single three-digit number.
Below are some instances in which this number plays an important role in your life.
How Does Credit Affect Your Life?
- Job Search – If you are, or will be, looking for a new job in an field in which you’ll be dealing with money or need a security clearance, then you’ll need excellent credit.
- Insurance –When you are looking to purchase insurance, especially home or car insurance, your score will help determine how much you pay. Insurers have concluded that a person’s credit score says a lot about the amount of risk that the person represents. A lower credit score equals more risk.
- Buying a Home – When you go to buy a home, you’ll enjoy lower interest rates and mortgage terms if you have a higher credit score.
- Renting a Home – Even if you are a renter, your credit score will be looked at if you are trying to rent from a large apartment complex that is run by a property management company. You’ll pay more in rent if you have a low score. 5. A bad credit score will cost you a lot in interest when you take out a loan for your next car, try to get a new credit card or take out a loan.
- Cellphone – Getting a cellphone without a high credit score will cost you in that you will need to put down a deposit, usually around $500, for the first year of service or choose a prepaid plan.
- Utilities – Utility companies often check your credit score and, if you have bad credit, you may be asked to put down a security deposit.
How To Raise Your Credit Score
Once you know the cause, you can take steps to improve your credit score.
- Check to make sure that your credit report is correct. If there is a mistake, have it taken off by filing a dispute and, you’ll see that your score improves.
- Pay your bills on time. Lenders will report your payments, and their timeliness, to the credit bureau.
- Pay off your debts. The best way to raise your credit score is to do a debt consolidation. While this will temporarily lower your credit score, in the long run, it will improve your score dramatically. Additionally, by consolidating your debt you are lowering the amount of interest and fees that you’ll pay as well as having to make one single payment a month.
As you now know, your credit score really does affect your entire life. If you have bad credit, do consider debt consolidation as a convenient and reliable way to raise your credit score so that you can enjoy the benefits that come with such a score.