Everybody is affected by credit more than you may realize, here are the top 4 Ways Your Credit Affects Your Life.
Every part of your life requires investment. Effort, time, and usually money. Very often, you need more money than you have. And that, of course, is what credit and loans are for.
When we’re young, we often don’t think or care about our credit histories, if we even know they exist. But at some point, we become aware that credit matters. A lot.
Unfortunately, a lot of us don’t realize this until something bad happens, such as being denied a mortgage or major loan because of our past financial mistakes.
But no matter what, your credit will make a difference in what is available to you, both in terms of loans or credit and beyond.
Buying Your Home
Homebuying is the most obvious and well-known life event that your credit scores and credit reports directly impact. That’s why we’re addressing it first.
Buying a house is one of the biggest, most important investments in most people’s lives. However, buying a home with bad credit can be one of the hardest things to do.
As we all know, the Great Recession of 2008 caused a flood of foreclosures and short sales across America. But even though the housing market rebounded, banks remain cautious. Their requirements to qualify for a loan are more stringent than ever.
Even if you aren’t prepared to buy a home, keep in mind that renting a home or apartment usually comes with a credit check. Low credit scores or negative items in your credit reports could disqualify you or force you to pay a larger deposit.
Buying a New Car
Buying a new or used car is another common purchase that requires most Americans to take out a loan. Auto loans are typically easier to qualify for since they are smaller and for shorter terms than mortgages.
But, poor credit usually means you will have to pay much higher interest rates. Essentially, you’ll be paying thousands of dollars more for the same vehicle simply because of your credit.
On top of that, you’ll probably have to put more money down on your car. And that’s not all. There’s another way that your credit could make your car cost you more, one that few people know or think about: insurance.
Everyone knows you have to buy auto insurance when you own a vehicle. But few consumers realize that auto insurers also check your credit reports when determining your insurance rates.
So not only is buying a car more expensive with bad credit, it will continue to rack up extra costs for years.
Interest Rates on Loans and Credit
While the necessity of good credit to qualify for home and auto loans is fairly well known, they are far from the only types of loans or credit that your credit scores and credit reports directly impact.
Just like the more major loans, the more negative credit items you have in your credit reports, the higher your interest rates are likely to be. You’ll be paying more for the exact same things.
On the other hand, better credit could help you save thousands on loans of practically every kind.
Many banks, lenders, and creditors are still willing to lend you smaller amounts. But loans designed for “subprime” credit are often the highest interest rates. You will also have more documentation for your loan.
Maintaining and building good credit is by far the best way to fast-track the lending process and save a lot of money while you’re at it.
Pursuing a New Job or Promotion
Many people still don’t realize that employers’ hiring processes often include a credit check. Employer credit checks used to be limited to only certain types of jobs, but in the last few years, they have become commonplace.
Not only that, but even if you already have a job, your employer may check your credit anyway. It is no longer unusual for employers to run regular credit checks on their employees.
What’s more, if you try for a promotion, a credit check may be required. In fact, credit checks are more likely the higher the position you’re applying for.
Any way you look at it, improving your credit scores is a great way to make yourself more trusted and competitive as well as save hundreds or even thousands of dollars every year.
Our credit professionals are standing by to help you learn how to repair and build your credit so that you can take advantage of the best lending opportunities at the best interest rates. Call or message us today to find out more.