Your credit record can influence your life on many different levels that most people take for granted until it is too late. The top 3 reasons that you should maintain a good credit history include:
1. Applying For New Credit
If you ever want to apply for new credit, a loan to finance to buy a car, home or other asset, or even a hard money loan, the the creditor or loan provider will first check your credit record. If you have a bad credit score, it may increase the interest rate or amount that is charged to service your loan or credit agreement.
You may also be requested to provide a security deposit or some other sort of surety in the form of collateral or a cosignatory in order for the loan to be approved. The loan or credit amount that you can request may be restricted or lower than what you need or require.
In most cases, financial institutions will simply decline credit, loan or finance applications for bad credit. This is due to the fact that individuals with bad credit are a higher risk as their credit history already reflects their inability to or inconsistency in repaying past or current debt.
2. Career Prospects
Prospective employers, especially those offering the top jobs in any industry, will first check your credit record before interviewing you as a candidate for a position within their company. A bad credit record will reflect badly on your character and it is less than likely that you will be considered for an interview, never-mind employment.
In fact, universities, colleges and other tertiary education facilities may also check a prospective student’s credit history before granting them access to their institution to study further. This could affect your future career path even before you enter the job market. It is common for school leavers to apply for credit early and then default on their financial obligations.
It is essential to pay careful attention to your credit record from the outset to prevent bad credit from impeding your employment prospects.
3. Property Rentals
Most property leasing agents and private rental providers will check the credit record of a rental applicant before leasing a property to them. They do this in order to establish whether the prospective renter is more likely to pay their rent in full and on time as well as to establish the character of the person they will be renting to.
A bad credit score could prevent you from leasing the apartment, house or property of your dreams. It could also limit your ability for finding rental accommodation to the extent that your living conditions become less than ideal.
To avoid bad credit, there are three important steps to take:
– Never enter into a credit, loan or finance agreement where you cannot afford the monthly repayments.
– Always make your repayments on time.
– Make sure that your repayments are made in full.
If for any reason, you cannot fulfill your financial obligations, contact your creditor and make arrangements to renegotiate your credit or loan agreement terms.