A Low Credit Score Can Derail All Your Dreams

By: Johnnie Mayo

A high credit score is a very good thing to have. It makes all sorts of purchases and loans easier to get. If you have acquired a low credit score, the world of finances has become difficult for you to wade through. This is because what is written on your credit reports tells those who read them a story about you.

There are three credit bureaus and the people you make payments to report how well you do this to them. They are Experian, Transunion and Equifax and anyone that you owe money to can report information such as whether or not you made your payments on time. In turn, when you are negotiating to buy something for which you will make payments, new creditors will look to see your credit reports to check on your payment history. If this history isn't good, it will cost you.

One thing people look for to gauge your creditworthiness is the FICO score. FICO stands for Fair, Isaac & Co. and it can range from around 340 to around 840. The best place to be is in the excellent range with a score of around 750-840. A good rating ranges around 660 to 749 with a fair rating around 620 to 659. A poor rating, around 340 to 619, is an area you do not want to be in. If you are ranging in this area, it would be worth your while to invest some time in repairing your credit.

Scores in the poor range can cost you so much more money when you decide to do anything such as buy a big ticket item or rent an apartment. This is because if you have made several late payments in the past or have even defaulted before, people will be less willing to take a chance on you and lend you money. On the other hand, with a good credit rating practically everything is handed to you on a silver platter.

One very important benefit of a high FICO score is the ability to receive a low interest rate for loans, such as mortgages, car loans, credit cards, student loans and personal loans. It also helps you to be able to refinance your mortgage when you are ready to do so. This can save you several thousands of dollars over the years, because the lower the interest rate, the lower will be your interest payments. A high credit score means that lenders can consider you to be a low risk and they can feel confident that they will get the money back that they lend to you..

A high score can also help you move into a new apartment. Landlords are doing credit checks and what they read in your report helps them to decide if they will rent to you or not. If your credit reports show that you have a history of not paying your bills, they may turn your application down. This can make finding a new apartment to move into a long and drawn out process. Once you do find someone who is willing to take a chance on you, you will pay a high price for your low credit score with a high security deposit and/or higher monthly payments. You may even be required to have a co-signer. Convincing someone to co-sign for you can turn out to be another daunting task and the landlord can even make you sign a contract stating that you will be ineligible to have your security deposit returned; all because of bad credit.

Supposing that you turned out to be one of the unlucky ones who, because of bad credit had to pay a large security deposit and higher monthly payments, you can also receive this treatment from the utilities companies. Electric, gas and phone companies, who will be aware of your bad credit, too, will require you to give them a deposit before the utilities will be turned on. One or all of them can require a $200+ deposit. Moving could be a highly expensive endeavor if you are unlucky enough to be singled out by everyone as a highly risky client.

Also with a low credit score your choice of apartment buildings may be limited. The better complexes, after reading your reports, are the ones most likely that will deny your application. You will be forced to live in a complex which may not be to your liking, because your options are limited. The only choices you may have will be in a less desirable area than you would like.

Another consequence of a low credit score is your employability. In the current economy many people are being laid off, therefore, the pool of people looking for work is growing. The higher your credit score, the better your chances are to be considered for a new position. This may be a surprise, but employers check prospective new hires' credit reports as lenders do. When they see that you have a high credit score, they believe that you are reliable and responsible as you have always paid your bills on time. With a low credit score, your resume may be placed at the bottom of the pile.

If the job you are looking for requires a background check, you may be at a disadvantage here, too. Included in a background check is a credit check. A low credit score may keep you from passing it. You may have to consider looking for work in an area that you are not familiar with in order to be working at all.

How about looking for insurance? You would like to receive the lowest monthly payments as possible. A low credit score will ensure that this doesn't happen. Home and car insurance companies base their decisions on how much to charge you on your credit score. They believe that if you have paid your bills on time in the past you will make timely payments to them, too. Those who cannot demonstrate this to them can expect to pay substantially more each month.

You may be aware that cell phone companies do a credit check before entering into a contract with new customers. If you show them that you have a history of paying the bills on time they will not require you to put down a deposit of hundreds of dollars. With a low credit score, this undoubtedly will be your fate.

Be careful when you go to lease a new car or apply for a new credit card. With a low credit score, dealers will have reason to charge you a high interest rate, meaning you will be making higher monthly payments. This can happen with credit card companies, also; they will charge a higher interest rate depending upon how low your FICO score is. But, someone with good credit may be rewarded with a 0% interest rate, no annual fee and maybe even not having to have a credit limit. It's something to aspire to!

As you can see from reading this article, there are several people who are interested in your credit rating. Anything you set out to do from renting an apartment to passing a background check can be affected by your FICO score. This can be a good thing if your score is high, above 700, but if your score falls below 620 you will not be enjoying the result as much. Taking some time and putting in some effort to improve your score would be a worthwhile expenditure of time. You will pay so much less for everything you purchase.

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You will find an excellent guide to raising your credit score, Credit Secrets Revealed: Everything You Need To Know About Improving Your Credit Score!, on www.productsupplycenter.com/web143991.

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