Over the years, more and more people have become reliant on credit. As consumers, we’ve become dependent on using credit for purchases that sometimes can go beyond our means. A great example is the current global pandemic which took a toll on some people’s paycheck that left them relying on credit to pay-off their general living expenses.
Despite the current situation, businesses still consider your credit score to be an integral part in deciding whether or not they would allow you to purchase on credit or how high the interest rate would be.
But what is a Credit Score?
A Credit Score, or also called your FICO Score, is more than a financial tool. It is a number that determines and represents an individual’s creditworthiness in the business world. It has become an essential part of our lives that it affects a lot of factors when it comes to our financial capacity.
Your score is being computed and affected by several factors. Credit Score can be obtained by ordering from the three major Credit Bureaus, Transunion, Equifax, Experian with a small fee, or you may get it from Annual Credit Report.com.
Now you know what it is, so why is it important to have a good credit score?
1. Renting an apartment. A landlord uses credit score to look at your history of paying-off and see if you are able to pay the monthly rent on time. This means that your score might become a deciding factor on whether you’ll be living in a studio or a 2 bedroom apartment. It might seem harsh, but there is still a workaround to this even with a low Credit Score.
2. Purchasing a car. Having a low Credit Score doesn’t necessarily mean you cannot buy a new car. What car dealers want more than anything else is to sell you a car. The difference would be in the interest rates. It’s not a big surprise that a person with a Credit Score of 700 and above would get a more favorable interest rate than the person who has a score of 500 below.
3. Better Interest Rates. Speaking of interest rates, credit score doesn’t only affect the interest rate when purchasing a car. It goes with everything else like a mortgage. Home mortgages aren’t uncommon, but with a high Credit Score, you could save thousands of Dollars in interest.
4. Applying for a job. Now, employers now check and are now keen on knowing about your payment history. This serves as a proof of trustworthiness and being responsible. Having a low score would reflect mismanagement that would make your chances of being hired, slim.
5. You might find yourself needing to apply for a business loan when starting your own business. While bad credit might affect your chances of securing a loan from traditional lenders, there are other alternatives to securing a loan.
6. Likewise, requesting a lender to increase your credit limit is almost impossible if you have a poor Credit Score. You’ll most likely be asked for a higher interest rate in return.
7. Finally, it’s just about overall convenience. You won’t need to worry about all the things listed if you have a good Credit Score.
So how can you improve your Credit Score? It starts with yourself, or if not, there are reputable Credit Repair and Credit Sweep companies that could help you get that Credit Score!