How Your Credit Score Follows You Around Like a Criminal Record by:Greg Pesetsky
The most vital part of your financial well-being is your credit score
, commonly called your FICO score because most scores are determined on the Fair Isaacs Corporation Credit scale. When we typically think of the importance of our credit scores, we think of how this little three digit number is used by creditors to judge our creditworthiness to obtain loans, mortgages, credit cards, and other financial products. But a credit score carries much more weight than just the types of loans we can get and the terms of those loans, but also affects our ability to get the job we have been training for, the amount that we are charged for insurance, or even our ability to qualify as a tenant/renter of a decent apartment. Yes, the credit score is a powerful force in many aspects of our lives and can follow us around like a criminal record for years, wreaking havoc and allaying well-formed plans.Credit Report or Credit Score? Which Matters? Both!
You may think of your credit score and your credit report as one in the same. Not true. While your credit report is a detailed accounting of your credit history, current account information, balances, delinquencies, defaults, bankruptcies, and other identifying personal information, your credit score is much more. Your credit score is a three digit number that is assigned to you as a borrower based on the information that is contained in your credit report. A special mathematical formula is used to determine a number from 300 to 850 that creditors and potential lenders can use to judge your potentiality as a good borrower.
What Your Credit Score Really Means When Getting a Loan
As you might well imagine, those borrowers who have a low credit score have a hard time finding a finance company, bank, credit union, or other lender who will extend money on their behalf. The same is true when those with less than stellar credit try to open up a credit card account. Your credit score can cause you not only to be offered credit products and loan products that are more expensive in terms of the interest charges that you will pay for the credit extended or money loaned to you you may also have to pay more exorbitant fees and qualify for lesser amounts than borrowers with good credit.
Dreaming of Home Ownership? Not With Bad Credit!
If your credit score is below 700, your chances of getting approved for the icon that is synonymous with the American dream (a home mortgage) are slim to none. Perhaps of all the negative outcomes of bad credit, this can be the most devastating. Many folks are finding that, due to recovering from bad credit, they are often in their forties before they qualify for a starter home. That can be devastating to families raising children.
Want to Work For NASA? Better Pull Your Credit Report First
Although there are good, hard-working people with horrible credit, more and more companies and even the government are now requiring that you have a certain credit score to be eligible for employment which must be determined in pre-employment screening. Credit card giant Visa even uses the fact of the credit check prior to being hired that most companies now require on its website, proclaiming, When youre ready for a REAL JOB youll be glad you have a good credit score. Yes, the credit check is performed alongside the typical background screening, reference check, and drug screening. Employers claim to be able to judge the trustworthiness, reliability, and character of the candidate by looking at this type of information, and oftentimes a candidate with superb skills but bad credit will be rejected in favor of a candidate with lesser skills and better credit.
Auto, Home, and Life Insurance Costs More for Those with Credit Problems
Another punishment that is afflicted on those whose poor credit score follows them around like a shadow is that insurance companies charge higher premiums for the automobile, home, and life insurance coverage that they need. In fact, insurance companies create what is called an insurance score, based on your credit score, but factoring in your previous driving record and the length of time you have been insured with your previous carrier. So not only will you pay more to drive that new car off the lot, youll also pay more to keep valid insurance on it as well.
Tenants Forced to Live in Less Appealing Accommodations Due to Bad Credit
As anyone who has been apartment shopping lately can attest, there is tons of red tape to cut through when you rent an apartment that is decent enough to live in. This red tape also includes a check of your credit score. Landlords insist that by checking potential tenants credit scores, they can determine whether the tenant will pay their rent on time and take care of the apartment or home they are renting and this also gives them a means to check on any previous problems that the potential tenant might have had with previous rentals. Many folks with derogatory credit files and low credit scores can only find housing in neighborhoods that are unsafe for their families and may be a long commute from their workplace.
About the author
Greg Pesetsky has worked in Debt Settlement for 8 years and is considered an expert in the industry by his peers. Greg is IAPDA Certified and has a good standing in the industry. He owns and manages Practical Debt Relief. http://www.practicaldebtrelief.com Need Advice On Debts? Which Service Should You Turn To? by:Michael Challiner Private Student Loan Consolidation, Is There A Best One? by:Roger Guzman, M.D. Overcoming "How do I get paid?" with Realtors When Doing A Lease Option Or Rent To Own by:Wendy Patton Your Retirement Account: Why You Should Save It For Retirement by:Michelle L. Marrs The Job Descriptions Of A Manager by:Amy Twain Use Your Credit Wisely by:Jake R Avey How to Chose your E-currency Exchanger by:Daniel da Silva Bootstrapping Basics Entrepreneurs Need To Know by:Ellisa Brenneman How to Start Your Own Commercial Cleaning Business by:Jeremy Gray Penny Stocks Greed is not Always Good by:John Whitefoot Priortizing Prevention by:Steven Wachs Tips for Personal Loans by:Teeny Ingberg How to Make a Foreclosure Purchase by:Teeny Ingberg