Your credit score just like your credit history plays a major role in your financial future. It determines a lot of things from the type of house you can live, the type of loans you can access, and several other things. For many of you who have heard about credit scores, many times all you know about it is how it relates to getting loans. However, that is not all there is to credit score and the impact it has on your life and financial decisions.
At Velocifin, we have discovered that your credit score can also affect the type of employment you get, the insurance you can access, and your cell phone bill. In this article, we shall be discussing the role credit score plays in your financial future.
1. It Determines the Place You Can Get To Live
You need to plan your finances to live in where you have always dreamt of living. This decision can be affected by your credit score as a good credit score can make you achieve it while a bad credit score may cause otherwise. Several property managers try to review your credit score to ascertain your ability to pay for the house before giving it to you.
These managers try to be sure you don’t have negative reports that can affect your ability to pay moving forward. Bad credit may result in a larger deposit if you insist on getting a particular house. For many, a bad credit score may cause them to reject your application for the home in its entirety.
2. Affording a Mortgage
Are you planning on owning a home of your own in the future? Do you know that one of the best ways to achieve that is through a mortgage? Mortgages allow you to take loans to build a home. Mortgages are to be paid over a specified period as agreed by the mortgagor and the mortgagee. However, before mortgage lenders give out a loan, they take steps to review your credit score.
Determining the quality of a credit score for a mortgage varies from one lender to another and from one loan type to another. With a high credit score, you stand a better chance of accessing different mortgages all coming at very low rates. A bad credit score limits your access to mortgages. While there are lenders that offer loans to individuals with bad credit score, they so with very interest rates.
3. Purchasing a Vehicle
If one of your future financial plans is to buy a vehicle, then you have to start working on your credit score as early as possible. Based on the type of vehicle you want to buy, you may require an auto loan. The auto loan that will be accessible to you and the rates at which they will be available will be determined by your credit score.
With a great credit score, you can easily qualify for the best auto loans that are available. This is because many companies that offer these loans to individuals always want to do so at low risk. Giving someone with an excellent credit score an auto loan comes at very low risk. Getting a car loan with a poor credit score is almost near impossible. With a poor credit score, you are also likely going to be exploited by loan companies. While they may make this loan available to you, they charge an interest rate equivalent to your credit score. A bad credit score will significantly affect your interest rate and cause you to pay more monthly.
4. Ability to Access Different Necessities
There are several things that you may want to buy that will require your credit score. With a good credit score, you do not have to pay more for these necessities. On the other hand, with a bad credit score, you may not access these necessities, and if you do, you will have to pay more. Some of the necessities that will require your credit score include:
· Cellphone service plan: There are several cellphone service plan that reviews the credit reports of individuals before they are given access to a specific plan. With a good credit score, you can easily access such service plan. On the other hand, you may be denied access to such a plan if you have a bad credit score. Services that require your credit report includes access to some payment plans or technology.
· Opening savings account: Banks at several levels always run a background check on the credit reports of individuals when they are opening a savings account. There are several systems and software that can be used to check the banking activity of individuals to determine whether they are positive or negative. Your credit report will contain your activity on other bank accounts, if they were closed, why they were closed, and your overall management of money.
· Applying for a credit card: To get a new credit card, you will have to make an application to the issuer. Before your application is granted, the issuer reviews your credit history to determine whether or not you qualify for the card. What is expected of your credit score before you qualify for a credit card determines on the type of credit card you are applying for and the financial institution you are applying to.
Good or bad, your credit score has a very huge impact on your financial future as several big moves will be decided by it. To ensure you don’t experience any financial difficulty in the future, you must start taking positive steps to build a good credit score. The possibilities you can access with an excellent credit score is limitless and so are the opportunities you can access with a bad credit score limited.
To keep your credit score strong, you have to understand the factors that impact the score and work on those factors. If you have to change anything to improve the score, there is no better time to do that than now.
