Have you ever wondered why one should have a good credit rating? Your credit rating is a standard evaluation of your credit health, and it is something that will be taken in consideration from the first day that you apply for a credit card, home loan, store account etc. It is of utmost importance to work on your credit rating from the first day you start to work. In this article I will briefly describe why one should be aware of his or her credit rating and worthiness.
Firstly I will explain the difference between a credit rating and a credit score. A credit rating is where your financial history is being evaluated and then you are then able to see exactly where you stand, who you owe how much money, different creditors that you owe, and how up to date your credit status is. So it is of utmost importance to keep all your payments to the creditors up to date. A credit rating is where you are given a score. This will then be taken in consideration when you apply for all kinds of credit. This score is calculated depending on the status of your credit rating. And the higher the score the better is the chance of getting the loan you need or anything that has to do with credit.
It is also clear that your credit rating does have an affect on other things in life to. Like if you want to get car or home insurance, then they will also take your credit rating for granted to determine your monthly premiums and rates that you have to pay the insurance company. If you have a bad credit score then you are at bigger risk to the company to not pay your monthly premiums. That’s when they will give you higher monthly premiums to someone that has a good credit score. This doesn’t seem fair if you are a good driver and if you are someone who has never even filed a claim.
Your credit score can also be taken for granted when you apply for a new job, especially if the job has to do with credit cards or financial aid etc. The employer wants to see if you can make good financial decisions and that you will never be a risk to them to take some of the money that belongs to them. More and more employers will look at your credit score, just like they look into your crime history etc.
It is of utmost importance to keep your credit rating and score as high as possible. It is a factor that will go with you for the rest of your life. And it is very important not to ignore your credit status. I will advice anybody to get a credit report at least once a year to exactly where you stand in the world of credit.