Understanding the Impact of Good and Bad Credit

credit score factorsThink of your credit score as a report card on how trustworthy you are; not only financially but as an individual. Today, a credit score means much more than just how well you pay your debts and your loan with bad credit. Many businesses now use your credit score as an indication of the type of employee you will be. If can’t manage your own finances and pay your debts on time, many employers will see you as irresponsible and perhaps even untrustworthy. Your credit score will follow you wherever you go and will impact many areas of your life. Understanding just how a good or bad credit score can affect you personally and professionally is the first step to good money management.

What a good credit score means

A good credit score is something that will definitely benefit you when it comes to saving money. People with higher credit scores tend to get lower interest rates on credit cards and short term loans. In addition, people with good credit have more options when choosing to finance a product, car, home or furniture. But just what is a good credit score? A good credit score is usually between 700 and 750. Fair credit ranges between 650 and 699 while poor credit is typically between 600 and 649. Anything below 600 is considered bad credit. These credit score ranges are not used by all lenders. Many lenders have their own definitions of good credit and use their own systems to determine if a borrower meets their criteria, but most lenders consider a score over 750 as excellent credit.

credit cardsWhat a bad credit score means

A bad credit rating can make life very complicated and difficult. Not only does a bad credit rating affect your employment options,
and it can affect where you live even if you are only renting. Most apartment complexes perform a credit check looking for poor
payment history and other negative information. A bad credit score can lead to higher deposits for apartments as well as higher rents and even your application being turned down. Bad credit will also affect the type of car you can purchase and how high your interest rate will be on a car loan. Bad credit will also make it more difficult to get a cell phone contract, open a checking account, or receive government assistance and specific government licenses. Obtaining a copy of your credit report on a regular basis is crucial to maintaining good credit. If you already have bad credit, then you need to take steps to improve your credit rating.