Today, A guest Post From Joy -
There are many things that can have an impact on your life. How much money you make and where you live are a couple of them. But there is one in particular that can affect your life no matter who you are or what you do for a living — your credit score. Having a good one is extremely important. It can influence many things in your life that you may not have ever realized.
Value of a Good Credit Score
You may know it, but your credit score can influence several different areas in your life. By taking care of your credit score, you can improve everything from your job to your love life.
Many employers are now checking your credit score before agreeing to hire you for a new job. They want to be sure that you are taking care of your own personal finances. If you have a good credit score, they can usually expect that you are self-managing and pay attention to detail.
Your insurance rates are directly tied to the health of your credit score. If you have a low credit score, you will be stuck paying higher premiums. A good credit score will help you qualify for better insurance programs that offer great rates and benefits.
This is perhaps an obvious one, but your credit score has an immediate relationship to your ability to get loans, incredibly low interest rates, and the best terms available. Having a good credit score is essential to getting a decent mortgage at an affordable rate.
It’s a reality — some potential dating partners may want to know about your credit score before agreeing to go on that first date. Maybe they will wait for the second date, but you shouldn’t be surprised if he or she pops the question early on in your relationship. Many consider a good credit score as just as important as appearance and personality.
How to Get a Credit Report
The best way to see what your credit looks like is by ordering a copy of your credit report and credit score. You can go to any number of sources to get this information. You can order credit reports from each of the three national credit bureaus – Equifax, Experian and TransUnion. You can also order a 3-in-1 credit report which allows you to view all three of your credit reports at the same time. It is a good idea to keep your credit reports monitored periodically throughout the year.
Once you’ve received your credit report, you need to review it to make sure the information it contains is accurate and up-to-date. Be sure that it gives the correct address and contact information. You should also look over each of loans or credit cards you have to make sure that they reflect your current payment status. Having inaccurate information about your credit history can be a real problem.
What Affects Your Credit Score
There are several factors that affect your credit score, but there are three in particular that weigh heavily when calculating your overall creditworthiness. Problems in any one of these three areas can have a significant negative impact on your credit score.
- Payment history.
Having problems regarding your payments and your record in making payments is critical. Thirty-five percent of your credit score is derived from your payment history. Failure to make timely payments can lower your credit score quickly. Missing payments will guarantee a lowered credit score.
- Credit utilization.
How much credit you have impacts your credit score. Lenders compare how much credit you have used with how much credit you have available. The higher the ratio, the greater your credit utilization is. Considering that credit utilization is worth 30 percent of your credit score, the lower you can keep it, the better off you will be. Most credit consultants suggest keeping your utilization ratio at less than 30 percent.
- Length of history.
How long you have had your credit accounts is also very important. It helps lenders see how you’ve done with your payments over a several years. If most of your credit is limited to recently opened accounts, your credit score will be lower. The length of your credit history can account for 15 percent of your overall credit score.
Your credit score is extremely important. Because it can affect so many areas in your life, you need to monitor it regularly to ensure that it is accurate and up to date. Adopting wise credit-management behaviors can help keep your credit score healthy. Failure to monitor these things can cause you to have a negative credit score, which can adversely affect many areas of your life.
Joy Mali is a staff writer on The Washington Times and Examiner. Her work is also published on Lifehack, DailyFinance and other mainstream sites. She likes to share interesting tips to help people manage their personal finances & credit.