Why Should You Worry About Bad Credit?

There are a lot of reasons why you would want to keep your credit reports looking good, though some will not be as apparent to an average consumer, or as logical. Sometimes, we discover these reasons quite late and the repercussions are no laughing matter.

When applying for insurances, whether home or auto, or some other kind, many insurance companies will review your credit history and take it into consideration when computing for the premiums you have to pay – the worse the credit report is, the higher the premiums usually will be. Insurance are recurrent expenses and you definitely want your premiums to be as low as possible, believe me. Sometimes, you may have already repaired your credit reports by paying all your debts and you would think that it should benefit you greatly. Yes, it will definitely improve your credit standing, but your records of years past will still appear on your credit reports and that is why you really want to keep it clean all the time, if possible. Paying the whole amount reflected in your credit bill is an effective way, but it is still a defensive move. The proactive move will be not to make unnecessary purchase in the first place, unnecessary being defined here as something you don’t need, or something you can’t afford.

Sometimes, the repercussions of having bad credit report are more… painful. Case in point: applying for a home loan or auto loan. The interest rates that will be applied to you, and similarly the maximum amount you will be allowed to apply for, will both be determined in part by your credit report. And you will find that whether you go to insurance company A or B, this will be the same case. The insurance rates will vary, as well as the maximum loanable amount, but the principle remains the same. You are given higher interest rates than someone who has a better credit report, and lower loanable amount.

An even more emotional issue will be applying for your job, and you know that you have all the qualifications needed, and suddenly you are turned down for the position. You don’t know what happened, since you had a very good interview, and you really felt that it was in the bag. You see, it is a common practice for many employers to look into their applicants’ credit history and take this into consideration when deciding to hire someone. Credit standing signifies responsibility and discipline to many people, and although there may be many stories behind why your credit report is as it is, potential employers are not privy to these information and will only rule based on what they see and that is your credit report.

So with these many reasons, and perhaps there are others out there unbeknown to us, not to mention the fact of the many dollars spent (wasted!) on interests, it is to your best interest to keep your credit reports in pristine condition.

Without a doubt, keeping your credit reports in good condition is a battle that is not won by most people. But we should not keep from trying all the way, with all our might. If we can afford it, we should really refrain from buying all those things we can not afford, or those that we don’t need anyway. Some say that if you feel the urge to buy something, sleep on it and check if you still want it tomorrow, or the day after that.

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