The following is a guest post…
5 Reasons to Improve Your Credit Score
Nobody likes to think about their credit score, and many individuals choose to ignore the subject completely. Many people are too afraid to even attempt making amends with their credit, but a poor score has the ability to negatively affect many areas of opportunity. If you’re lacking the motivation to take the plunge and start improving your score, here are a few reasons to help motivate you to get rid of the excuses and get your mind-set on improving your score.
Credit Affects Insurance Premiums
Insurance premiums are usually high enough, but poor credit can cause your rates to climb significantly higher. Using your credit score to determine a suitable insurance premium is a rather new development, and those looking to invest in a car or homeowners insurance policy are the most at risk for being judged by their score. Keep in mind, though, that some life insurance providers have started using credit as criteria as well, and this trend appears to be growing which is all the more reason to start improving your credit as soon as possible.
It might seem strange that an insurance agent would be using your credit to determine a reasonable premium, but the agent looks at your credit score as a quick representation of how responsible you are. They feel that the worse the credit is, the more likely you are to be a risk for the company, and the bigger risk you are, the higher premiums you’ll pay.
Your Ability to Take out Loans is Based on Credit
Having poor credit makes it hard for you to be able to borrow any money in the future because lenders look at your history in order to determine if you’re likely to pay them back. A poor credit doesn’t look promising for banks, and in most cases, your request will be rejected. On the other hand, if you are approved for a loan with an unimpressive credit score, your interest will most likely be extremely high.
Poor Credit Makes it Hard to Find Housing
It’s happening more often that landlords and apartment managers are checking potential tenants’ credit scores before allowing them to sign a lease and move in. If you have poor credit, it can make finding housing incredibly difficult, and even when credit doesn’t determine whether or not you can rent out a place, it can make the upfront cost of the deposit skyrocket.
Employers Check Credit before Hiring Employees
Although the amount of employers who actually check credit scores of potential employees is relatively low, it does happen. In the eyes of an employer, a credit score is a symbol of responsibility and accountability, and if your credit score hints that you don’t take your finances seriously, it can make them question how determined you would be to commit and perform on the job. While those judgments can be unfair and misconstrued, it is a method that more employers are utilizing, so that’s all the more reason to start bettering your credit.
Poor Credit Can Require Deposits on Utilities
Many utility companies require a credit check before they’ll set you up with their services, and if they feel that you’re credit reflects a possible risk of late or missed payments, you’ll be asked to pay a security deposit. This is often surprising for customers looking to set up their heat and power, but it’s something that more companies are starting to implement in order to lower their level of risk.
Unfortunately, your credit score is used to measure your reliability in many areas of your life, and whether it’s an accurate representation or not, it’s a fast and easy way others use to decide if you deserve their trust. Poor credit can severely infringe on your future, and it’s clear that the use of it among companies and places of employment is increasing. To put your own mind at ease, as well as help you pave a smoother path for your future, face your credit score head on and start taking the necessary steps to improvement.
About the author: Arlene Chandler is a freelance writer who loves helping people prepare for life’s unexpected turns. She currently writes about career advice, finance tips, and life insurance Australia from AAMI.