A credit history is a record of someone’s payment of debt over a period of years. The record may contain such details as how much credit card debt you have, whether or not you have paid your mortgage on time and details on loans you have paid off in the past.
If you have had credit problems, this information will also be on your record, and the negative data can affect your financial prospects in a variety of different ways.
1. Higher Mortgage Rates
Your credit record is an important factor in getting a lower mortgage rate when you purchase a home. Home financing institutions generally offer their best rates to individuals with a credit rating of 740 or higher.
You may still be able to get a loan if your credit score is 600, or even 540, but the interest rates are likely to be higher.
2. Less Access to Good Jobs
Many employers will check applicants’ credit scores with the assumption that a good credit score implies a reliable person that can be trusted to perform well in the work environment.
Although this may seem unfair, the trend to associate credit history with a good risk for employment continues, and your bad credit record can cost you an opportunity to acquire a good job.
3. Higher Auto Loan Rates
Financial institutions may offer loans with higher interest rates to those seeking an auto loan, or they may not be willing to lend at all.
Fortunately, there are alternative lenders, such as BlueSky Auto Finance, that specialize in acquiring auto financing for individuals with bad credit.
These lenders can help you to find the financing you need so you can purchase the vehicle you need for work, school and other important activities.
4. Credit Card Rates
Negative data on your credit record can also cause you to pay a higher interest rate on your credit cards.
Even if you start out with a low credit card rate, problems on your credit record can cause your credit card company to increase your rate significantly, so that the purchases you need to make cost much more, if you must carry a balance on your statement.
When you research your credit record and take care of any problems that exist, you can restore your ability to get better interest rates and better opportunities.
Always check your credit record to make sure it is up-to-date and has no errors, and you will be rewarded with greater financial opportunities.