5 Ways Credit Affects Your Life.

Credit affects a number of aspects of our life; home loans, auto loans, and availability of extra funds, just to name a few. Here are 5 ways that poor credit can impact your life that you may not have thought about before.

  1. Access to Emergency Funds

Medical, home, pet, and auto emergencies happen, and they can come at the most unexpected times. Credit cards and emergency loans can help you make sure the expenses are covered, but a low credit score could keep you from obtaining either of these options.

  1. Damage Your Relationships

If you are unable to be approved for traditional lending, how will you be able to finance your large purchases? Turning to friends and family to borrow money, or cosign a loan is an option that quickly comes to mind. Late payments to creditors will hurt your credit profile, but being late on your promise to a friend could end your friendship.

  1. Renting

Many landlords will check a prospective tenant’s credit profile before allowing them to rent. The eviction process can be very expensive for a landlord, so a potential tenant’s missed payments could leave them without a lease.

  1. Interest Rates

There are ways to obtain approval for a loan or credit card with bad credit, but they usually come with very high interest rates. High interest rates can add up quickly on a home or auto loan.

  1. Quality of Life

Debt can prevent you from getting an education, a better job, and fulfilling your potential. Bad credit will only further this problem by forcing you to put your goals aside when you can’t get what you need to succeed in life.

Don’t let your credit hold you back, make it work for you!

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Each person’s credit situation is unique. Results may vary, and CreditServices.com makes no guarantee of any particular result. The information in this site is intended for general informational purposes only, and is not to be construed as legal, tax, accounting, or other professional advice.  As such, it should not be used as, or relied upon, as a substitute for seeking professional legal, tax, accounting, or other advice. All information in this site is provided “as-is”, with no guarantee of completeness, accuracy, timeliness, or other results obtained from its use. In no event is CreditServices.com, its Affiliates, or their agents or employees liable to you or anyone else for any decision made or action taken in reliance on the information in this site. “Affiliate” means any entity that directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or common control of the party in question.

Focus On Your Credit Reports

1. You have multiple credit scores.
Most consumers are well aware that they have a credit score. What many don’t know is there are actually thousands of credit scores available. They are offered by various companies that use data to evaluate your financial  history and provide a risk assessment to lenders.

Don’t concern yourself too much with the exact number that you find as there is no guarantee that your lender will use the same numbers that you found. That being said, right around 90% of lenders use the FICO scoring model when making their lending decisions. Though they are not typically used for lending decisions, online scoring models can be useful in tracking your credit building progress and changes in your scores, but don’t put too much weight on the number that you see.

2. Focus on your credit reports, not your credit scores.
Your credit reports from Equifax, Experian, and TransUnion (the three major credit bureaus) contain the information that make up those various credit scores. So no matter what credit score you see, the information on your credit reports was used to calculate it. Taking advantage of your right to a free annual credit report is crucial as it allows you to ensure there are no mistakes on your credit reports. Verifying the information on your credit reports is accurate ensures that your credit scores are reflecting your financial history correctly so you aren’t being judged falsely when applying for credit.

3. Credit can affect employment opportunities, apartment rentals, and insurance.
Employers, landlords, and insurance providers may run a credit check for applicants. This means that your credit history can limit your employment and housing options, and determine the rates you pay for insurance. Consumer Reports released a study in July 2015 that found insurance rates on average tend to be higher for good drivers with bad credit, than bad drivers with good credit.

Bottom Line:
Your credit history plays a significant role in your financial life. Educate yourself on the information that is used to make these decisions, and get familiar with FICO scores, as they are the most commonly used of any credit scoring formula.

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