Are You Confident in Your Credit Score?
Maybe you “think” you know your credit score but have no clue if it is good or bad. Unless you check it out, you will never know. You could be hurting yourself without even knowing it. Because a credit score is one of the most important numbers you have. Along with your Social Security Number and your birthday. Everything a thief needs to steal is your identity.
Do you monitor your credit score regularly? It’s good to know how it’s doing. This article will discuss why checking your credit score is always a good idea.
Understanding Credit Score and Credit Report
Your credit score, or credit report, is a numerical representation of your financial history. The three major components of a credit report are:
1. Credit accounts. These are lines of credit you have with lenders, such as a mortgage or a car loan.
2. Credit limits. This is the amount you can borrow from a lender at a given time. Such as a mortgage or a car loan.
3. Credit history. This includes all of your previous credit accounts and how you’ve handled them over the years.
The three biggest factors affecting your score are:
- How much you owe
- How long you’ve had credit
- Types of credit you have.
It’s always possible to catch up on them if you know what to look for. Here are three reasons why it’s a good idea to monitor your credit score:
First. Your credit report can provide ideas about which lenders might be more willing to give you a loan. For instance, if you have only one open account from a lender whose rates are higher than average, they might be reluctant to lend you money.
Second. Knowing your score can help you determine whether it’s worth applying for other loans. If it’s too low, it could hurt your chances of getting a loan for a car or other major purchase.
Third. Having a better understanding of your credit situation can help you make smarter decisions about the type of financial products that offer the best rates and terms for you.
You can check or get your free credit report with Experian, Equifax, and Illion– the three largest credit reporting organizations.
3 Reasons To Check Your Credit Score Now
1. You Might Be Denied a Loan
If you’ve heard this before, you’ve probably also heard it before. You might have even had this happen to you or someone you know. It can be very frustrating and hurtful to be denied credit.
Common reasons for denial include:
- A credit score is too low.
- The high amount of debt owed to other creditors.
- No credit history at all.
- Debt not paid on time or at all.
- Previous bankruptcy.
Within the last six months, new accounts have been opened.
A bad credit score means that the lender is not willing to lend money to you. These are also known as “impaired” or “dishonoured” credit scores.
It’s quite common for people with bad credit scores to apply for a loan and be declined. The reason for this is that they may have missed payments on their bills. And the lender wants to make sure they can pay back the loan. Or at least does not want to lose money in case the person defaults on the loan.
2. Your Interest Rate Might Increase
Your interest rate will likely go up. As if most people didn’t know, your interest rate is based on your credit score. If you have low credit, lenders are more likely to give you a higher interest rate. They do this to avoid having to make additional payments for you.
Interest rates are based on a credit score. And a bad credit score can make it harder to get a good one. Financially unstable people generally have a tougher time getting a loan or credit card because lenders want to make their money back.
It could impact the interest rate on any new car, home or credit card you apply for:
New Car
The need for a car loan or insurance is an issue that many people take into consideration when deciding whether to buy a new car. And this is true even if you have a good credit score.
Your credit score may impact your interest rate. If you have a high credit score, you likely won’t face any problems getting approved for a loan or insurance policy. Nevertheless, depending on the lender and the kind of loan you desire, your credit score may affect your interest rate.
If you want to purchase a vehicle for cash, it is recommended that you purchase the vehicle with the highest interest rate possible because of how it will impact your ability to obtain financing in the future.
Home or Mortgage Application
Your credit score is a number that acts as a gauge of how likely it is that you’ll pay your bills on time. This is an important factor in applying for your mortgage because it will determine the interest rate you’re likely to get.
Credit scores are calculated using five main factors: payment history, the amount owed, credit history duration, credit types, and new credit requests. Your credit score varies between 300 and 850 points, with 700 being considered typical. Factors like payment history and the number of inquiries on your reports also play a role in determining your score.
It is a critical aspect when purchasing a house, and you want to ensure that you have a high credit score. A good score basically means that you can borrow money from a bank or other lender without having to pay a lot of interest on the loan.
Credit scores are calculated based on an individual’s payment history. If someone doesn’t have enough credit history, he or she will have a lower credit score than someone with a longer track record of paying bills on time. If someone has very little or no credit history at all, he or she will likely be denied for most loans and mortgages.
Related Topic: Credit Repair in Australia Can Assist You with Your Bad Credit To Get a Home or Car
Credit Card
The average credit score is about 715, and anything below 620 can negatively impact your ability to qualify for loans and credit cards.
It’s generally considered good news if you have a score in the 750s or higher, and that can help you qualify for lower interest rates and better terms on loans and credit cards.
However, if you’re looking for a particular loan or card with a specific interest rate, you may want to consider fixing any low scores — even just a few points — before applying.
One of the most prevalent credit errors is failing to pay bills on time. Late payment may substantially decrease your credit score. Which can significantly reduce the amount of money you qualify for in the future.
3. You Might Be Failed For A Job
The most common reasons a potential employer would deny you a job are because of your credit score or lack thereof. As a result, it’s important to keep up with your credit score and make sure it stays in the high 700s, which is nearly impossible to achieve if you have an outstanding debt.
Here are some reasons why bad credit could spell demise for your job search:
You’re already working full-time. Even if you’re employed with no evidence of unemployment or financial hardship, that doesn’t mean your credit is good enough to be an employee and still pay down debts and pay on time.
The best way to improve your credit score is to get a job and start paying off those debts.
Your credit history is too short. If you’ve had less than three years of credit reporting, you may find it difficult to find employment — especially if you don’t have an established track record for payment history (which can take years).
If you can’t open new accounts for at least three years, stop applying for positions that require a lengthy application process (like customer service positions).
Follow Simple Steps To Fix Your Credit Score In A Few Months
We all want to be approved for the best and the most expensive credit card and loans, and we tend to make mistakes that can ruin our credit scores.
There are a few steps you can take to improve your credit score in a matter of months. Here are the top four:
1. Pay off any debts you have.
This will improve your credit score quicker. Just because you’ve paid off $300 in student loans doesn’t mean you should apply for another $500 credit card.
You should only do it if your score will actually increase because of it. But try to keep an eye out for better deals and offers. So you don’t get swindled by loan sharks again someday — or worse yet, someone who will take your money but won’t let you pay it back easily or at all.
2. Close old accounts.
Credit freezes are one way to keep your good credit from being destroyed, but they can be inconvenient or cumbersome for some people, especially if they are trying to build their credit fast.
If you’re not sure whether an account is closed, research online how to close it yourself instead of waiting for someone else to tell you. Then consider requesting that it be removed from your credit report altogether if it’s still showing up on yours despite being closed with your permission long ago.
3. Don’t open new accounts until they’re needed.
Credit card companies rarely cut people down to zero limits when they’re starting out in life. This is often the ideal time to build bad credits with no limits so no one can harm them in the future when they have greater financial resources to lose by overspending.
But if you fall behind on payments when you have several lines of cards charging high-interest rates, don’t start applying for new cards until you’ve blown through that debt limit in full, and then some with Chapter 7 bankruptcy coming soon after that seems inevitable anyway.
4. Contact a credit repair lawyer.
Credit repair attorneys are trained in helping you improve your credit score. They can help you address the various factors that impact your credit score.
The law firm of our choice- Australian Credit Lawyer, has an experienced team of attorneys who are experts in the different types of credit reporting agencies, who can help you understand what factors are causing your issues with your credit score.
Credit repair lawyers are the only reliable source of help if you want to improve your credit score. They can help you remove negative items.
Including late payments, collections accounts and public records that show up on your credit report. And they can take care of any outstanding balance or debt that may be hampering your ability to repair your credit score.
By contacting a credit repair attorney, you’ll be able to get answers to all of your questions about how to cut down bad credit reports quickly and accurately remove negative items from your historical credit reports.
Conclusion
Without question, our lives are increasingly tied to our credit scores, especially if we want to buy a house or car. Many people don’t check their credit report because they assume they’re fine or because they assume their credit score will stay the same or even go up. But if you do nothing, you might be surprised at the impact it can have on your financial future.
Remember when was the last time you checked your credit score to be sure it was correct?
Errors in your credit report may lower your credit score get in touch with an Australian Credit Lawyer today to help you deal with credit issues.