The Importance of Knowing your Credit Rating
It is very important that you know what your credit rating says about you. This is a score that can be as high as 850 and it will follow you from the first time you apply for credit until you die. It is a big part of your overall financial well being so you want to make it a priority to have as high of a score as you can. Your credit score doesn’t just matter when it comes to you getting approved for a credit card or a loan.
Many people think that their credit rating and credit score are the same but they aren’t. It is very important that you know the difference with them. Your credit report offers a very detailed history of your credit including what you have applied for, what you owe, if you have paid on time or late, if you have filed for bankruptcy, and even record any entities that have reviewed your credit.
With your credit score, you get a number that is used to determine your credit worthiness. The formula is one that is very in depth and your number can change often. Not paying bills on time though and having too high of balances on your debts can give you a low score and that makes it harder for you to obtain credit – and to get any credit at a decent rate of interest.
Many people don’t realize how much their credit rating affects other things in their life too though. For example, when you go to insure property such as a home or a vehicle they can look at your score. Studies indicate that you are less likely to pay your insurance on time if you have a low credit score. As a result, your cost can be higher than someone with good credit. This doesn’t seem fair if you have never filed claims and if you have a good driving record but it is the reality of the situation.
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Many people also don’t realize it, but many potential employers also take a good look at credit. They want to make sure that you are going to be able to be responsible in your role within their organization. They don’t want to take a risk that you won’t be able to make good financial decisions for the business. If you are in a role where you will be handling money and other financial transactions such as credit cards, they want to make sure you aren’t going to tempted to take any funds either.
In some jobs such as working in a bank, a poor credit rating can prevent you from getting hired. They simply don’t want to take the chance that you may be connected to any internal fraud or problems. They have seen it happen time and time again so the best way to prevent it is to profile their employees in many areas and now that also includes their credit rating.