Why are Credit Scores So Important?

credit score

Robert Conrad Kerson, NegosentroMany people have heard about credit scores and reports but don’t really know what they are all about or why they are important. Your credit score can have a big impact on your life for many years to come, which is why it is vital that you keep your score in check.

You will often see reports about the effects of credit scores and how many people are unable to access certain services as a result of their scores. If you want to know where to watch msnbc news finance section will have plenty of reports relating to the difficult that many people are facing when it comes to accessing credit. This is one of the main damaging effects of having poor credit because the majority of us have to rely on credit at some point during our lives.

Accessing financial services

If your credit is poor, accessing financial services becomes a nightmare. You might think that this is not a bad thing because it means that you cannot fall into debt. However, what happens when you need a mortgage to buy a home or you want to rent a property? What about when you want to purchase a new car and need a loan? You might not even be able to open a standard bank account if you have poor credit. While it is not something that is at the forefront of people’s minds most of the time, it is something that has a massive impact on their lives from behind the scenes.

So, how can you keep your credit score in check? Well, there are a number of things that you need to do in order to avoid getting poor credit. This includes:

  • Make payments on time: Every time you make a late payment or miss a payment on a bill or debt, a black mark goes onto your credit file. This is something that you need to avoid, so make sure you make all payments on time. If necessary set up direct debits or standing orders to make this easier.
  • Don’t max yourself out with debt: You may have a range of credit cards to your name but you need to make sure you don’t keep them at the maximum level and then only make minimum repayments. Not only will this cost you a fortune in interest but it will also affect your credit score.
  • Don’t keep applying for credit in a short period: If you apply for credit and you are turned down, avoid going from lender to lender trying to get credit. This will also leave a black mark on your report, which will affect your credit score.

It is also worth remembering that having no credit score at all can have a negative impact. You should therefore try and take out some form of credit such as a student credit card but make sure you repay it in full each month. Simply use it to make day to day purchases instead of cash and then use the cash to repay the credit card. This way you build your credit but don’t get charged interest because you are repaying in full.