20 Jun Impact of Credit Score on Your Daily Life
Having a good credit score is essential because your credit may impact on many aspects of your life. There are certain practices that may push your credit score to a least numerical. A good credit score is not only important when applying for a new credit card; there are other ways in which it affects your daily routine. So it becomes important to maintain a good credit score throughout your life. The potential benefits of a good credit score may extend beyond debt. But in several circumstances, bad credit can affect your applications for housing, insurance premiums, and security deposits which may add roadblocks to many of the everyday necessities of life.
Here’s a closer look at when and how credit score may affect your everyday life:
Buying a House
It is no more surprising that your credit score will affect your ability to qualify for a mortgage and buy a house. In general, it is quite essential to maintain a good credit score while you are looking for a home or car loan from a bank/financial institution. A good credit score can start giving you a lower interest rate, a larger amount of loan, a longer repayment period, and a greater chance of approval of loans. In the case of a low score, your loan application can be denied, and also there will be chances of imposing higher interest rates than usual while loan approvals.
Purchasing a car
Although auto loans are secured by the vehicle you are looking to purchase, but still auto will check your credit to determine your eligibility. Having good credit could help you qualify for auto loans at the lowest possible rate. It may also help you apply for special financing deals during a promotional period, such as zero percent interest.
Credit Card Limit
If a lender knows your credit score drops regularly, he may lower your credit card limit. This is to keep you on check while you’re spending so you don’t have to pay a big bill later. If you continue to spend without considering the reduced limit, your credit usage ratio will increase and further affect your credit score negatively.
Most of the utility companies, including gas, water and electricity providers, can check your credit before you open a new account. If you have poor credit, you may be required to pay a security deposit to open an account and switch on your utilities. Having good or excellent credit can facilitate and make the whole process easier.
If your score is low, it shows you’ve delayed payments or not paying regularly. In such cases, the lenders try to contact you to remind you of the credit card payments. If you do not answer their calls, then you will be sent legal notices. All these reminders will create chaos in your everyday life.
In many states, insurance companies may use a credit-based insurance score to help determine your premiums. While those scores differ from consumer credit scores, they are based on your credit history. Hence, having a long history of paying your bills on time can help you qualify for lower insurance premiums.
It’s better to keep your everyday life in your control and not let lenders take control of your peace of mind. Hence, make payments on time to keep a review of your score. If you are genuinely experiencing financial hardships, it is recommended that you notify your lenders and request for some time before you start repaying. That can prevent chaos. It takes longer periods of time and effort to rebuild your credit score, so take care of it before slipping from your hands!!