A credit score is a 3 digit numerical number ranging from 350-850 (FICO) which determines a person’s financial responsibility and credit worthiness. Payment history and credit inquiries are reported from credit lenders, to the 3 major bureaus (TransUnion, Equifax, and Experian) whom then generate a score depending on the lenders reported information. The difference between a low and high score determines a persons eligibility for life’s important necessities such as purchasing a home, and even a car. This score represents a consumers financial responsibility, and how likely they are to default on a payment.
A person with a healthy credit score will often find drastically lower interest rates on home loans, auto loans, personal loans, and even credit cards. High credit scores show lenders a great deal of responsibility, and approvals for loans will be competitively at the best rate saving the borrower thousands of dollars in rates and fees. Maintaining a healthy credit score can open a lot of doors to opportunities those who have a low credit score are denied access to.
In contrast, low or bad credit scores can seriously harm a persons financial worthiness in ways you may not have imagined. A bad credit score can often lead to expensive deposits, outrageous interest rates, and can even determine an employment opportunity.
Landlords and utility companies use this information to determine deposits, so if you’re plagued with bad credit, you can expect to pay a much higher deposit upon approval.
Potential employers also have been known to determine someones employment eligibility based off their credit score. Typically jobs that involve handling money or sensitive information are notorious for checking credit scores, and of course with the applicants permission, do a soft pull which does not affect scores as hard per say as a credit card applicant.
But did you know that poor credit scores is not always a consumer’s fault?! Just like anything in life, the system is not designed perfectly, and more often then you may believe, the bureaus are reporting false and inaccurate information causing damage to credit reports all over America! This is why certain laws have been enforced to protect consumers from false and negative information being reported. It’s also important to keep in mind.. Banks and Bureaus Make Money From Bad Credit!