YOUR PERSONAL CREDIT IS YOUR FINANCIAL DNA

Starting with the obvious, there are creditors and lenders. We all know that when you apply for a credit card, a personal loan, or a bank account the first order of business is to pull your credit report. The reason is to size you up and see not just whether to approve you, but also how much of a credit line or loan amount to offer and at what interest rate. The better your credit the higher the limit and the lower the interest. In this particular case, good credit and the proper kind of credit can make and save you money.

If you have ever missed a payment you have experienced the aggressive nature of debt collectors. They stop at nothing to hound you until they collect what they feel you owe. Unfortunately, it is their right to pull your credit, check it out, it’s in the fine print when you signed up. Your credit report is their weapon in their efforts to hunt you down. Fortunately for you, rules and regulations dictate what they can and cannot do in their collection efforts. I am sure it will not shock you to learn that some collectors push the envelope in what they are allowed to do. Knowing your rights is your weapon if you ever should need it.

Obtaining a mortgage can be a daunting task. You may be asked to supply pay stubs, bank statements, tax returns, and much more. Part of the approval process is always a complete review of your credit reports. Poor credit can serve up some less than desirous interest rates that will cost you tens or hundreds of thousands in fees and interests charges. The same for rental properties. Poor credit can result in huge security deposits or even worse, denials. A good credit profile can save you money in the short and long term and countless stress.

This is one of those that fall in the “essentials” category, primarily shelter. It’s pretty hard to survive these days without utilities like electrical, garbage, gas, and of course nowadays Internet. With good credit, you will breeze right through the setup process. With poor credit, you could be subject to high deposits, or worse yet you could be denied service altogether. Then what? Exactly! Good credit now ensures that you can secure the essentials for your family.

More employers are choosing to access an applicant’s credit report in the process of making hiring decisions. Note that employers must obtain your permission to access your credit and you can always refuse. Just know that in most cases if you refuse don’t count on getting the job, that is usually an immediate rejection of your application. The same is true for employers looking to offer current employees a promotion. If you have poor credit including account delinquencies, high utilization balances, negative public reports, or even a high number of inquiries it could be seen as a negative and could result in a loss of a promotion or a salary raise.

There are many government agencies that provide support to US citizens. In certain circumstances, a government agency will check your credit report to determine whether you qualify for a particular program. Your credit report could be a factor when you apply for a government-issued license for your profession or business. Additionally, your credit report could supply information while calculating court-ordered requirements like payments toward fines or child support.

Insurance companies calculate premiums by assessing risk factors. For example, your car insurance premium is tied to your driving record. If you have several speeding tickets, car accidents, or even parking tickets you could be considered high risk and that will raise your auto insurance premium. Risk is the primary determining factor for all insurance, including life, health, home, business, and auto. As a regular practice insurance companies pull your credit report to assist in determining how risky you are. If you have negative information on your credit reports like late payments, collection accounts, or too many inquires you could find they cause your insurance premiums to increase. Whereas good credit can assist in lowering your premiums.