Fixing your credit score can easily save you a thousand of dollars over a lifetime, as well as other frustrations. A good and an indispensable credit score mean that you can access to a lot of capital.
If you want to have a nice car or home then you got to have a rock solid credit score. It is very important that you understand different major credit bureaus are the jury and judge when it comes to rating your credit score. But unlike the conventional jury and judge, these lending institutions do not allow you to defend yourself before they give their verdict.
Many lending institutions are there to make the profit and their decisions are not most reliable. Sixty percent of adults do not view their credit score at least once or twice a year.
These consumers as the result end up being penalized with very interest rates and additional unnecessary fees. The amount quickly sums up to thousands of dollars above what those with good credit score pay for car loans, credit cards, and mortgages.
In the United State, the average credit score varies from one state to the other and a recent study indicates that most consumers can’t even benefit from this advantage. This is because their credit score is too low.
A bad credit report can cost you thousands of dollars a year in overpaid interest, or can keep you from being approved for credit altogether. Use the chart below to see how bad credit scores may impact you.
|COST OF BAD CREDIT
The following are disadvantages of having a Bad credit score
Low Approval Tendency
If you have a bad credit score or if it is below average, you will have a hard time getting approved for a loan. Your credit score shows your direct borrowing reputation.
It indicates your ability to borrow money and pay back within a given duration time.
If your credit score is bad and you ought to have the delay in loan repayment leading to negative comments. Lenders will not be in a position to grant you loans for the fear of being unable to pay back with the accrued interest promptly.
Very High-Interest Rates
If you happen to get approved despite having a bad and below average credit score, you will end up paying very high interest for your loan.
The market rates that are minimal and advertised on the televisions and in adverts will not be applicable on your part. This is because you will be treated as a risk borrower and therefore you will have to pay more for your loan due interest.
Another thing that most companies would inquire if you have a bad credit score is deposits in exchange for a service or a product. Electric, cell phone, and cable companies all look for your credit score when you open an account with them.
If you happen to have a low credit score it may raise the alarms. This will consequently lead to a higher charge and an expensive deposit on you to protect the company.
If you have difficulties getting approval for a loan or you are charged high-interest rates when you are approved. Understand that you do not have to settle for less since this type of setback can waste your money on interest.
It is paramount to start checking your credit score and assessing it for problems. On your report as well you can make efforts towards working on it. If your credit score falls below 650, you have to work towards fixing it.
The following are tips to consider while looking forward improving your finances and credit score
Check For Mistakes
In different states, you can get your credit report for free once a year from all major consumer credit reporting agencies. Although you can get your credit report for free in some cases you might end paying a little amount.
This will give you a chance to check for mistakes in your reports. Doing this is paramount since you will be in a position to rectify some mistakes that affect you negatively in your credit report.
Keep Up To Date On Your Credit Score
To achieve this, you have to request your credit report from the different agency for every four months. This is better instead of ordering for your report from different consumer agencies, once a year.
If you suspect or see something that is inaccurate you have to act and tell the respective agency to correct it promptly. You must call or go to the offices of the consumer agency in order for them to correct the error.
Know The Score
A credit score is a three-digit number that indicates whether you are worth a loan. The scale runs from 300 to 850, the higher, the better. A late repayment or a notice indicating that your account has been sent to a collection agency reduces your credit score by 35 to 100 points.
The best number as mentioned is a credit score above 650 but the magic number is 750 or higher with all the bureaus.
Pay Your Bills On Time
The only thing that you can do to improve your credit score is to pay your bills on time. One-third of your credit score is derived from how consistently you pay your bills.
If you are disorganized or you have high workloads consider setting an automatic repayment method.
Use Credit Cards responsibly
The age and the type of credits cards that you use contribute one-third to your credit score. If your credit cards have given you problems consider cutting them out after you clear standing balances.
But do not close the accounts, the accounts stay open for a long time to build up on your credit score.
Hire A Professional
Finally, you can hire a professional to assists you in fixing your bad credit score. The following are reasons as to why working with a credit repair agency is paramount:
You will help to someone who knows how inaccurate remarks on your credit report can be removed in a timely manner
A profession will be able to evaluate credit reports from the three consumer agencies side by side and come up with an effective plan that will sort you out
A profession will raise your chances of getting a better job given that some employers look at your credit score before they hire you.
It is worth to mention that your rating and information contained in your credit report are of no consequence to anyone but you. That is why you are the only person that can work out on improving your credit score.
The self-help credit fixing systems are far much cheaper than hiring a profession. In addition, you have the higher notch in control of the entire process, not to mention peace of mind and added security.