Importance of Credit

For major purchases credit may be useful because it provides an immediate source of funds where as you might be saving for years to afford a house. Or maybe credit may supply the capitol for a small business start up. The problem many people have at this point is that they now owe the money lent to them and do not realize the amount of debt they are in. You are required to make a monthly payment and to pay interest on the amount loaned.

This is known as a hard inquiry, and it usually knocks a few points from the credit score.

At that point no credit score, good credit score or excellent credit score will make a huge difference in terms and availability of a mortgage.

There is a surprising amount of people that don't know how their credit works. Almost everyone has to make financial decisions before they even graduate high school, and most struggle after making that decision since they were not prepared to make that

(3) In order to get the best interest rates, on home mortgage loans or car loans you need to have good credit ratings, which enables you to borrow more money with less interest. However poor credit effects you the opposite way, it can also keep you from qualifying to rent a house / apartment, and denial of credit cards. Other issues you may have with bad credit, you may have to pay a security deposit on utilities, you might not get that phone contract you want, denied for employment, higher insurance premiums.

Making mistakes when it comes to your credit is a lesson that many people learn the hard way. Constant phone calls, mail, and threats can make a tough financial situation worse. Either how well or how poorly you manage your debts and finances are available to creditors to see when you apply for credit, such as for a retail store card, or even an auto or home

A credit score is a number used in people’s bank accounts. This number tells potential loaners if a person can be trusted to pay off their loans. You can get this number by starting when you’re young and taking small loans that are easy to pay off. This will build your credit score. Credit scores take a long time to build but can be reduced dramatically if you mess up and miss paying your loans. A credit score tracks your loans and how diligent you are at keeping up with them and how many loans you take out. You want to keep your credit score number up because if you ever want to take out a loan your credit score will make or break the deal. If you have a good record and good score you have a much better chance of getting a loan that you want or need. If you have a bad credit score you basically don’t have any chance of getting a loan until it improves.

This information helps determine if the tenant is likely to pay their bills on time. Finding a job is an advantage to having a good credit record. Employers have the option to look at an applicant’s credit history to decide whether or not that person is reliable. If an employment agency is checking a credit report they usually check it for fraudulent activity. Other company’s check for derogatory information. If those types of things are found then the applicant may have some explaining to do. Not every job looks at credit history. However, some jobs do such as, accounting, finance, or a high ranking position in a company. A person with good credit history shows if this person is responsible and if that person is able to be trusted with their finances. On the other hand, there are certain drawbacks of having a credit record on file. Some offenses to a credit record are minor and others are major. Bankruptcy is a case where a consumer is unable to pay outstanding debts. According to Investopedia (2001), “Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred prior to filing for bankruptcy” (2001). After the proceedings the individual is given another chance to pay off the debt. Bankruptcy is on file for ten years. During this time, the person or business responsible may struggle with the loss of property. Moreover, other losses may persist that include, loss of income, poor credit score,

Lacking financial education was the main key of why my credit was bad in the first place. By not having the education of basic financial principals and how credit works, I mismanaged my decisions on personal finances. After I started educating myself and talking with individuals in my network, then I pulled my credit score and viewed my credit summary to see what was being reported.

Consumer Rights & Reporting Regulations," n.d.). Anytime an individual applies for a line of credit, it is important to review the consumer’s credit history, to see the accounts they have had in the past, and also the accounts they still have, how they made their payments, whether they’re on time or if any were late. Using this information will allow the creditor to give the consumer the right type of

It is imperative that young adults comprehend the facets of obtaining and maintaining proper credit in order to sustain a sound credit history. For example, the most widely used credit score is Fair Isaac Corp.'s FICO score, which ranges from 300 to 850. A FICO score of 760 or higher reveals an individual’s respectable borrowing power, for even a recently reported late payment can have a substantial effect on a credit score (Holmes). In addition, young adults can learn the importance of securing proper credit and increase their attractiveness in lender’s eyes by aiming to use less than 20% of one’s available credit (“Get”). Since lenders pay close attention to the amount owed on credit cards relative to the limits provided, lenders are able

Your credit score helps them to determine the likelihood of you actually paying back any money

Before a lender considering your loan application, some key aspects are taken into account. The lender will try to confirm the details of your credit report. Also check your financial status and repayment ability, they will

A bad credit score—anything less than about 650—can make it extremely difficult to obtain a mortgage. A potential borrower's payment history is important to banks because it displays to them how likely it is they will get their money back. Banks are businesses too, so they have to ensure that their investments are savvy.

Buying a car with a bad credit car loans can have a positive impact on your credit history if handled correctly. If you have a job that can be verified, and if you are not currently involved in a bankruptcy,