Why You Should Develop a Healthy Obsession With Your Credit Rating
It pays to keep close tabs on your credit rating as it has a big impact on other areas of your life. Here are 7 reasons why you should make sure that you are fully acquainted with your credit rating.
# 1 – Loan lenders use it to assess you
Lenders use your credit rating to decide whether you are a good option when it comes to being approved for credit cards, loans, and especially mortgages. A low credit rating suggests to them that you may have problems making repayments, and affects the likelihood of them offering you credit in the future. Your credit rating can also be used to determine how much interest you’re charged on your repayments.
# 2 – It may not be up-to-date
Sometimes, your credit report won’t be up-to-date and this can have a knock-on effect on your credit rating. If you’ve recently paid off debts, it’s worth requesting your credit report to see if they have been updated as it will lower your credit rating if not.
# 3 – It impacts on your insurance premiums
If your credit rating is on the low side, you may find that it affects your insurance premiums. Some insurance companies will look at your credit rating before deciding how high to set your insurance premiums. This usually works on the basis that a lower credit rating means that you’re more likely to default on your premiums, which then results in higher insurance premiums.
# 4 – It’s a credit snapshot
Your credit report details all of your credit experiences in one place, which makes it easier to keep track of your various credit cards, bank accounts, mobile phone contracts and loans or mortgages. As your credit rating relies heavily on the contents of your credit rating, you can look on it as a snapshot of how healthy your credit situation has been over the last few years.
# 5 – You can check for suspicious credit use
Checking your bank account(s) on a regular basis might seem a good tactic for ensuring that your identity hasn’t been stolen and used to make transactions, but this won’t give the full picture. If your identity does get stolen, the thief can make applications for loans or credit cards in your name without you even realising. Checking your credit rating regularly will alert you to any dramatic changes in the rating that may indicate credit misuse, and your credit report can shed further light on this.
# 6 – Bad credit areas can be looked at
If your credit rating is average or worse, your credit report will highlight areas where your credit could be improved.
On a similar note, a combination of your credit rating and credit report will highlight reasons why your credit applications (for example, for loans, credit cards or insurance premiums) may have been declined.
# 7 – It can affect your employment
Some employers look at your credit rating during the job application process before deciding whether to hire you, so your credit rating can even affect how likely you are to get a job. This won’t be the case for every job and is more likely if the job is going to involve dealing with money.
Getting hold of your credit report
If you don’t currently keep a handle on your credit rating, start doing so today. Many people dismiss their credit rating as being unimportant, but this can be a big mistaken as far as your credit is concerned.
Getting hold of your credit rating is usually fairly simple through companies such as Experian and Equifax, and can be vital for getting a solid handle on your credit situation. One of the easiest ways to get hold of your credit report is to go to the Annual Credit Report website. This is free, and uses Experian, Equifax and TransUnion – the main three credit reporting agencies. You can request a free credit report from each of these every year through the website, although you don’t have to order all three at once. You’ll need to verify your identity through details such as your Social Security Number (SSN).
It pays to keep close tabs on your credit rating as it has a big impact on other areas of your life. Here are 7 reasons why you should make sure that you are fully acquainted with your credit rating.
# 1 – Loan lenders use it to assess you
Lenders use your credit rating to decide whether you are a good option when it comes to being approved for credit cards, loans, and especially mortgages. A low credit rating suggests to them that you may have problems making repayments, and affects the likelihood of them offering you credit in the future. Your credit rating can also be used to determine how much interest you’re charged on your repayments.
# 2 – It may not be up-to-date
Sometimes, your credit report won’t be up-to-date and this can have a knock-on effect on your credit rating. If you’ve recently paid off debts, it’s worth requesting your credit report to see if they have been updated as it will lower your credit rating if not.
# 3 – It impacts on your insurance premiums
If your credit rating is on the low side, you may find that it affects your insurance premiums. Some insurance companies will look at your credit rating before deciding how high to set your insurance premiums. This usually works on the basis that a lower credit rating means that you’re more likely to default on your premiums, which then results in higher insurance premiums.
# 4 – It’s a credit snapshot
Your credit report details all of your credit experiences in one place, which makes it easier to keep track of your various credit cards, bank accounts, mobile phone contracts and loans or mortgages. As your credit rating relies heavily on the contents of your credit rating, you can look on it as a snapshot of how healthy your credit situation has been over the last few years.
# 5 – You can check for suspicious credit use
Checking your bank account(s) on a regular basis might seem a good tactic for ensuring that your identity hasn’t been stolen and used to make transactions, but this won’t give the full picture. If your identity does get stolen, the thief can make applications for loans or credit cards in your name without you even realising. Checking your credit rating regularly will alert you to any dramatic changes in the rating that may indicate credit misuse, and your credit report can shed further light on this.
# 6 – Bad credit areas can be looked at
If your credit rating is average or worse, your credit report will highlight areas where your credit could be improved.
On a similar note, a combination of your credit rating and credit report will highlight reasons why your credit applications (for example, for loans, credit cards or insurance premiums) may have been declined.
# 7 – It can affect your employment
Some employers look at your credit rating during the job application process before deciding whether to hire you, so your credit rating can even affect how likely you are to get a job. This won’t be the case for every job and is more likely if the job is going to involve dealing with money.
Getting hold of your credit report
If you don’t currently keep a handle on your credit rating, start doing so today. Many people dismiss their credit rating as being unimportant, but this can be a big mistaken as far as your credit is concerned.
Getting hold of your credit rating is usually fairly simple through companies such as Experian and Equifax, and can be vital for getting a solid handle on your credit situation. One of the easiest ways to get hold of your credit report is to go to the Annual Credit Report website. This is free, and uses Experian, Equifax and TransUnion – the main three credit reporting agencies. You can request a free credit report from each of these every year through the website, although you don’t have to order all three at once. You’ll need to verify your identity through details such as your Social Security Number (SSN)
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