How much do you know about your credit score? If you’re like many people, you know you have a credit score, and you may even know what it is, but that’s about all you know! Even worse, many people have no idea WHY your credit score is even important in the first place.
If you’re not sure why you need to pay attention to your credit report and your credit scores, then you definitely need to start working on it. Because your credit score is more than just your financial history… in many instances, your credit score can actually change the course of your life! The question is, is your credit score changing your life for the better or for the worse?
Here are three things you need to understand about your credit score:
- Bad credit is expensive! Your credit score can cost you hundreds of thousands of dollars in extra fees when it’s less than excellent. There’s an old saying, “Buy with cash, pay once; buy with credit, pay three times.” Sadly, it’s the truth, as it refers to interest, or the cost of borrowing money. Not to mention the many other potential costs to bad credit, most of which lead to hundreds and even thousands of dollars spent on higher premiums for your auto and home insurance!
- Background checks aren’t all that potential employers pull! Your credit score can affect your ability to get a job. That’s right: your estimated ability to repay borrowed money (i.e., debt) also can be used to assess your suitability certain kinds of careers. Although legislation has been introduced to limit the access of prospective employers to your credit score, these are just limitations, not universal exclusions – and I promise you, many employers these days do check your credit score.
- Knowledge is power! Your credit score is a big indicator of your financial health and, as much as you’d like to, ignoring a low score won’t make it go away. Instead, it’s time to be proactive and start working to raise or restore your credit score. You just have to take the first step and then put your mind to it.
Remember, your credit score is somebody else’s business, and not just your own. Your credit score is big business these days. Not only is your score at the mercy of three different privately owned credit bureaus, whose entire business is rating you and your creditworthiness, but they actually make millions of dollars every year doing it!
These “big three” national credit bureaus, Experian, Equifax, and TransUnion, not only track your score, they CREATE your credit score. And this credit – or FICO – score that they assign you ranges anywhere from 300 on the low side to a perfect 850 on the high side. Which side do you want to be on?