Credit score is not just a number. It is a measure of your financial capability and healthiness. It can affect you everything from whether you qualify for a loan to the approval for an insurance application, up to whether an employer will hire you. If you do not have a good credit score, you must make a plan to improve it, else it can be costing your dearly.
When you apply for a mortgage, you definite want a package with the lowest interest rate possible. A mortgage term may get up 30 years, for any extra percent in interest rate can cost you pay more in the total interest of the loan. According the MyFICO, a division of Fair Isaac, a person with credit score between 720 and 850 might get a 5.922% rate on $200,000 mortgage with a 30-year fixed interest rate term. As compare to a person with credit score between 675 and 699 who only can get the best rate at 6.584% on the same loan. The monthly payment for the person who gets 5.922% is $1,189 whereas the 2nd person who gets 6.584% of interest rate needs to pay $1,275 a month; If you calculate the total interest pay over the life of the loan, the first one is $228,072 and the second one is $259,074. It is a $31,002 different. Do you see how much it will cost you if you have low credit core?
Do you know that an insurance company may reject your application just because you do not have good credit score? Some insurance companies use your credit report information to predict your likelihood of filing an insurance claim and the amount of the claim. Based on the risk factor analysis, the insurance company will determine the amount of premium they will charge on your insurance protection plan. You will get a good premium rate if you have good credit score. Bad credit score will cost you more in paying your insurance premium. That's why you need to improve it if you do not have good credit score.
Although credit scores are usually associated with getting loans and credit cards, they also can be used by employers to evaluate you capability for a job, especially if it is a finance related job. Your credit score will serves as a general measure of responsibility and organization. Many employers believe person will higher credit score is able to mange their financial better than the person who has lower credit score; hence the person with higher credit score will also able to manage their job and be more responsible at their job position. This means that you can potential fail to get a job just because you have low credit score.
The summary is a high credit score always enjoy more benefit in term of lower interest, more choices of attractive loan packages, lower premium on insurance coverage, higher odds of getting hire for a job application. Nowadays, credit score is becoming more important as many private and public organizations are using the credit score stated in credit report to evaluate a person before they approve for any application, offer a job, approve a credit card application & etc. It is important to ensure you have a good credit score, and if not you must put in place a plan to improve.
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