A Low Credit Score Can Derail All Your Dreams Part 2
- Posted on
It is important to have as high a credit score as is possible. A low credit score limits your options considerably. 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 bong da truc tiep . The higher your 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 score, they believe that you are reliable and responsible as you have always paid your bills on time. With a low 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 would rather not be looking in just to be working.
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 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!
Living with bad credit can be very difficult when you add in the snowball effect of mounting fees and charges. As we look at a couple of the bad aspects and the high costs associated with living with bad credit, we will also see that it does not have to be that way forever. The biggest roadblocks to recovery are the fact the interest rates you are charged are higher and the availability of new credit is almost nonexistent. After we look deeper into the bad parts, we will look at the brighter side.
Once a person is saddled with a low credit score, also known as living with bad credit, the credit card companies you have accounts with raise your interest rate. When the interest rate goes up, it means that less of the money you pay each month goes toward the principle. The other fun thing when you have a low credit score is that when you pay down your balance, the credit card issuer lowers your credit line. This hurts because you not only have less cushion on your credit availability, but also the percentage of credit card balance to available credit Affects your credit score as well. When we think about available credit, it is not easy to get.
Obtaining new credit when you have a low credit score is hard to do in an average economy. Now that we have been in a credit crunch for awhile, it is almost impossible. Many people with bad credit have to have such a huge down payment to buy things on credit; they often cannot make the purchase. The other fun fact about applying for and being turned down for credit purchases is that when there are inquiries but no new accounts on your credit report, that lowers your score as well. Living with the snowball effect of bad credit can be very intimidating, but you can get out of it.
Climbing out of the credit hole and breaking up the snowball effect of living with bad credit can be done. It will take time and you will need to make some wise choices. The first step is to obtain a copy of your credit report from free online companies. Just do not sign up for the additional services they push, as you just want a copy. Inspect all three reports for errors and contest any that you find. List out to whom you owe money, how much money and the interest rate you are being charged. Set up a budget and look at how much you are paying monthly for credit card payments. Pay the minimum amounts on the higher balance cards and as much as you can on the lowest balance. That way you will feel better as you see the balance going down. Once that is paid, go after the next lowest. If they are all similar balances, go after the account with the highest interest rates.