3 Ways Your Credit Score Affects You
Our credit scores represent one of the most important resources lenders have access to when they are trying to learn more about us. Many of our financial decisions become significant within our credit history and hold a considerable amount of sway over our lives.
Talking about our finances can be difficult. For some, it may even feel easier to take the ‘Ostrich’ approach by trying to ignore the problem until it goes away. Unfortunately, there are many ways in which a floundering credit score can hamper our ability to live life the way we want to, and facing the issue head-on will make it much easier for you to continue to properly manage your credit, and to remain positive about your finances going forward.
Ensuring that you are educating yourself on the many factors that influence your score is vital – for instance, bestloansforbadcredit.com covers the new fico changes coming up. Being armed with the right, up-to-date knowledge will help you to continue maintaining and improving your own score.
Below, we look at a few of the ways in which your credit score impacts day-to-day life.
1. It Will Impact Your Ability to Buy Property
Getting on the property ladder is, for many people, not only a rite of passage: it’s vital to securing their financial future and avoiding uncertainty as they move toward retirement. Of course, one of the greatest hurdles making dreams over the ‘starter home’ more distant is our ability to prove to lenders that we are a safe bet for a mortgage.
The process is difficult and, in many cases, long drawn out. Lenders must look deep into our financial history to gain insight into our ability to repay a sizeable loan, and one of the most efficient tools for completing this check is your credit score.
A low score can occur for many reasons, and lenders will automatically be wary about offering loans to anyone with a shaky credit history. Even if your current financial situation has significantly improved, you may not have done enough to see significant improvement – yet.
Similarly, insufficient credit history can also work against you. If lenders do not feel able to gain a full understanding of your ability to repay loans on time, they may consider you too great a risk.
A good credit score will stand you in better stead with your mortgage application – and it will likely lead to better rates.
2. It Can Impact Your Ability to Find Employment
In the past, the list of prospective employers running credit history checks was usually limited to those applying for jobs within the legal and financial sectors. However, an increasing number of employers are requesting candidates’ permission to run ‘soft’ credit checks during the hiring process.
The main reason they do this is to ensure that they are hiring financially responsible individuals, whose personal circumstances are unlikely to impact their ability to work.
As a result, a good credit score is likely to increase your chances of working for these employers. This can put many people in a difficult position; credit scores can be impacted by many factors, and regaining control over a muddied history is not always quick or easy – but it is possible.
Fortunately, a soft search will not have a negative impact your credit score.
3. It Can Make It Easier (or Harder) to Rent a Home
Landlords are increasingly turning to credit searches as a tool for ascertaining your level of ‘risk’ as a tenant. If you have a good credit score, then they are much more likely to believe that you will pay your rent – and your bills – on time each month. Conversely, a low or insufficient score runs a significant risk of deterring them from signing a lease with you.
Unfortunately, since it takes time to see significant improvement in your credit score, this fact can make finding a place to live an incredibly difficult time for many people. There are, however, ways of securing a rental property; some landlords will simply offer a higher security deposit as an option or allow you to co-sign with a guarantor. This will offer the landlord a better security net, should you suddenly be unable to pay your rent.
Keep Yourself Up to Date
If you have been through a rough patch, or don’t feel confident dealing with your finances, then credit scores can be a difficult subject to talk about. The good news is that there are always steps to take to ensure that your score – and your finances in general – are moving in the right direction, even if it takes some time to reach a point with which you feel comfortable.
