There are several things that you can expect to affect your lifestyle. The three most important, however, is your;
credit score, driving record and criminal history. Anyone who runs a background check on you can access all these pieces of information and can make a decision that may not please you. That is why it is important to maintain a clean driving record, a clean criminal history, and the highest possible credit score.
What is a Credit Score?
A credit score is simply a measure of a person’s ability to repay loans and pay their bills on time. Credit scores are usually generated by consumer credit reporting agencies and can be accessed by any lender. A credit score can also be looked at as a measure of how financially responsible an individual is. The score is normally prepared after analysis of credit reports, after which the person is rated. Usually, the higher the credit score the easier it is for a person to get an affordable loan and vice versa. Click here to learn more about credit secrets and read a success story that may help you build your credit rating.
Who Uses Credit Scores?
Nowadays, the vast majority of financial institutions, businesses and employers use credit reports to learn more about the consumer. For instance, if you apply for a loan from a lender, whether mainstream or otherwise, the lender will run a credit check before approving the loan. Your credit rating will determine whether or not you get the loan, the amount approved as well as the interest rated and terms that you get. If you have a high credit score, you can expect to get the money you asked for, an attractive interest rate and a long repayment period. If you have a low credit score, however, your loan application may be rejected and your interest rate raised. The repayment period may also be shortened.
Property owners also use credit reports to find suitable tenants. This is because they do not want to rent or lease their properties to individuals who are known to be financially irresponsible. Businesses that lease cars, RV, boats and other types of vehicles also run credit checks. If you have a low credit score, therefore, you may not be able to rent a car.
There are some jobs that require employees who are financially responsible. For instance, you cannot be promoted to a managerial level if you have a dismal credit rating. When you submit your application for the job, your employer may pull your credit report and decide not to give you the job due to your financial irresponsibility.
Causes of Poor Credit Ratings
There are many things that can affect your credit score. For instance, if you fail to pay your personal loan, mortgage or credit card debt, you can expect your credit score to reduce. This is because lenders are required by law to report, on a regular basis, any late payment, missed payment, insufficient payment or default to consumer credit reporting agencies. Landlords can also report defaulting tenants. Basically, anyone, you owe money can report you.
Bankruptcy can lower your credit score significantly. This is because you will be listed as a bankrupt consumer and any lender will see your status and consider you too much of a risk. The worst thing about bankruptcy is that it will remain on your credit report for several years.
If your home is foreclosed on, you can expect your credit rating to take a big hit. This is because your credit report will show that you defaulted on your home loan. It is important to note that errors and omissions can also be to blame for a poor credit rating. This is because a loan might have been listed to be in arrears, but you have serviced it according to terms and conditions. These errors must be rectified to improve your credit rating.
Guide to Building Your Credit
As you can see, your credit history is incredibly important and can affect the quality of life you live. That is why you need to do everything possible to improve or maintain a high credit score. The best way do this is to borrow small loans and repay them according to the agreed terms and conditions. If you charge your credit card, make sure to pay your debt in a timely manner. This will go a long a way in building your credit rating. If possible, avoid bankruptcy and foreclosure. Be sure to also check your credit report on a regular basis and have any errors rectified. You can also use the resources available online to raise your credit score.
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