5 Lessons Learned: Finances

Reasons to Know Your Credit Score

A person with a poor credit score probably has experienced the negative impacts. Missed payments, overspending on credit limit has a durable impact on your ability to borrow cash in future whether by applying for a mortgage, signing up for a new credit card or taking out a phone contract. There are some advantages of minding your credit scorer and ensuring that it stays at a good level. Let us find out.

1. Paying for a house.
If you are living in a rented house, chances that you will one day expect to own a property of your own are high. Owning a home is a great investment apart from giving you great freedom of extending and decorating your house, homes are worth a lot of money and can be sold or passed down to your children as inheritance. A poor credit history will make your passage to the property ladder a very difficult thing. Mortgage lenders consider lending money to a borrower with a poor credit history as a risk.

2. Job opportunities.
Not only will your ability to borrow money be affected by your bad credit history. People with a bad credit score are likely to get turned down for employment positions that they would have perfectly fitted with a good credit score. For instance, if you want to work in within the finance industry, it is impossible for you to be hired by a bank of any financial institution if you have a low credit score.

3. Getting the Required Finances.
While nobody likes to imagine themselves in a certain situation whereby borrowing funds is unavoidable, no one is guaranteed that it won’t happen. In case you get to such a point, the ability to take out your credit card or get an emergency loan may come in handy. When you have a poor credit score, it means that you are at a higher risk of your loan application getting rejected if you ever need to borrow money in future.

4. Getting a Commercial Loan.
Because entrepreneurship is now within reach more than ever, more and more investors are starting their own trades. But if you have a low credit score, then you may not have the ability to source for the needed funds to boost your business. Although you may still have other options such as angel investors or crowdfunding, the first source of funds for most investors is through a bank loan. Although the funds are meant specifically for business use, financiers will still consider your individual credit score.