What is a Credit Score and How Can it Affect your life
A credit score represents your credit history. It is a three digit number. The number could be any between 301 (lowest) and 850 (highest). The number is used to indicate your trustworthiness by lenders. The latter utilizes the number as a method to predict how you will use the money they lend you as per your financial history.
Higher numbers mean greater trustworthiness. Lenders will be loathed to give you money if your score is low. It is not only the lenders who judge you by your credit score. Those three digits could influence your life more than you like them to be. To give an example, higher ratings mean landlords will be more likely to give you their apartment. It may also affect your romantic life.
Purchasing a property
If you enjoy a 740 credit score or more, then the absolute best mortgage rates are at your beck and call. This is especially applicable to the conventional loans. Tied with a lower score? You still have a number of options. You can apply for the Federal Housing Administration Loans. The latter is extremely popular among those who want to buy their first home. You can put down a minimal 3.5 percent in-case your credit rating is 580 or more. If your credit score is below 580, then you will have to make a 10 percent down payment in order to qualify for housing loans.
Credit card upgradation
Love to use that new credit card which comes with superb cash-backs and a host of other benefits? You must have an excellent credit score. The premium credit cards require you to have superlative credit scores. These are the cards which come with ample amazing travel rewards and plentiful sign-up bonuses. If your credit score is lower, you can still enjoy the multiple benefits that come with credit card use. You can increase your Credit Score if you make payments to the credit card issuer on time. You must also use less than 30 percent of the total card limit.
Buying a vehicle and insuring it
The rates of car loans are similar to home buying rates. Better credit scores translate into a wider range of options. Low credit scores mean you must pay higher interest rates. The worst-case scenario: the loan application for a vehicle could be outright rejected. Insurance expenses get affected by credit scores as well. Majority of insurers in most states weigh their credit scores when they set the rates. The few exceptions among the stats are Massachusetts, California, and Hawaii. In all states, purchasers with low credit scores pay in excess of $690 every year to enjoy auto coverage when compared with those who have excellent credit.
Renting a new apartment
Fancy a flat with amazing views of the bay? The landlord may request you to furnish your credit report. The landlord may also do an online verification of the same. Having a higher credit score will help you to be distinct from the crowd of ordinary applications. All landlords prefer responsible tenants who they hope will pay rents on time. It follows that property managers are wary of individuals having dodgy credit histories.
Starting your own business is a challenge and low credit scores make it much harder. Lower numbers restrict funding possibilities and you will be hard-pressed to make headway into the business world. Banks tend to automatically reject any person whose scores lie from 300 to 629. Even small loan applications suffer rejection.
Having lower credit scores could also affect your employment prospects. This is especially applicable to positions where you get access to money or sensitive company information.