Are you setting any goals for the New Year? If so, then building a strong credit score should rank at the top of your list. A good credit score has an impact on your quality of life now and in the future. Building and maintaining a history of good credit will afford financial opportunities in many aspects of your life.
The banking industry will offer credit cards to people with good and bad credit. However, if your credit score is low, your interest rate will be high. Customers with good credit will secure lower interest rates and a greater amount of available credit. To keep in good standing with the banks you should always pay on time, as late payments not only give you a penalty fee but usually an increase in your interest rate. Smart consumers pay more than their monthly payment. If you have to carry a balance it should be less than fifty percent of your available credit. Owing too much on a credit card, even if your payments are on time will effect your credit score.
Several automobile companies offer great financing deals on new cars, some as enticing as zero percent. These rates and special programs are only offered to consumers with excellent credit. If your credit score is fair or poor you are faced with higher interest rates. You might put down more cash to keep your payments manageable, but you will probably be paying much more money for that car over the period of the loan payments.
You will need an auto insurance policy to drive off in your new vehicle. Here again, your credit score will be used in calculating your auto policy premium. A good credit score will save you money no matter which company you decide to do business with.
Buying a Home
Purchasing your first home is an exhilarating and exhausting process. Since the recession, the banks and various lending agencies have stringent guidelines to ensure prospective owners have a strong financial history. To qualify for a fixed mortgage rate buyers must have a good to excellent credit rating along with a required down payment and solid job history. If you’re not planning to reside in your home for the long term, a variable mortgage rate may be an alternative to keep your payments lower for the short term. The majority of brokerage firms run a credit check when they are initially gathering information from clients. If your credit score doesn’t meet their guidelines, then house hunting is not an option. These same procedures are followed for condominium and co-op purchases.
In fact, if you’re looking to rent in a private home or apartment building, landlords and managing agents also run a credit report to ensure their new tenants aren’t a financial risk. Some may even ask for additional funds such as two months security before signing a lease.
Before you call the moving company, you will have to purchase a homeowners or rental policy. As mentioned before, insurance companies will use the results of your credit report to rate your new policy. Having a good credit score will afford you the decision to secure a lower deductible on your policy without paying a higher premium.
Starting A Business
Whether you are starting a new business or expanding your current small business, securing a loan will depend on your credit score and credit history. Both your personal credit and financial business history are factored into the lender’s decision on funds and interest rates.
Many small business owners depend on both lines of credit and credit cards to assist in the financial flow of their daily business. A strong credit history will offer lower rates and possibly higher available credit limits.
Getting A Job
Many employers will ask approval to run a credit check as you submit your job application. This procedure is usually more common in government and financial sectors. It is possible that a negative score could keep you from potentially becoming a viable candidate for the job you are seeking.
Building a strong credit history and maintaining a good credit score will save you money on the loans you will secure with lower interest rates. You can use the automatic payment feature from your checking account to make sure your payments arrive on time. When possible, pay off your credit card balance in full every month. If you face any financial difficulty contact the lender to see if you can make other arrangements that will not have an impact on your credit history. Periodically, it would be a wise idea to run your own credit report to verify your personal activity.