Ever wonder why your local electronics store might refuse you credit but offer your neighbor instant credit? Ever wonder why people will tell you to always keep your history clean and accurate? It’s because this is the only way you can be offered additional instant credit (cards). But how is it that a lender can know this information? It’s not that they have necessarily have access to your credit report, but they do have access to your score.
Your score is a three-digit number ranging from 300 to 850. It is a score created by and used by the lenders. This is why we have listed below some top reasons why you should improve your score:
You will pay more for auto insurance
You tend to pay anywhere from 20 – 50% more with bad credit for auto insurance than if it were good. This is because many insurance companies now use what is called profiling, or basing your insurance premiums on your credit scores.
Some car dealers now give different markups to people with bad credit
Companies like Honda Finance Corporation will charge a 3.5% markup to consumers with bad credit. So if you are were buying a $30,000 Honda and you have bad credit, you will pay an EXTRA $1,050. It means more money out the window every time you need a car.
Employers now check credit ratings
Employers do this because they are afraid that it might affect your work as you might have larger issues, creditors might be calling you at work, or they may have to garnish your wages if you have really bad credit. Bottom line is they don’t want to deal with the hassle. Their choice is obvious.
You might lose your lease
Landlords want to rent to someone they feel confident will always pay the rent. How would you like to be homeless because of your bad credit? Or, almost just as bad as being stuck with a dumpy house, all because of poor credit history?
Issues with your utility companies
Utility companies are now pulling credit scores to determine who pays a deposit and who doesn’t. Surveys tells us that only 30% of people know that a low credit score could likely cost you an extra $500 in the form of a security deposit when getting signed up for utilities.
Having the patience, discipline, and know-how to improve your credit rating could not only result in lenders offering you better interest rates but also help you achieve financial peace of mind and help you live more comfortably in the future.