Credit Report Company

At one time, unless they owned a business, very few people borrowed money.  Saving was considered the only way to be able to afford major purchases like houses and cars.  Home mortgages were small and much less common than they are today.  In recent years however, it has become extremely common to borrow, not just for big-ticket items, but for all sorts of other things as well.  Many people think nothing of borrowing to take a vacation or have a wedding, and use credit cards to finance everything from restaurant meals to electronics equipment.

As a result, a large portion of the population makes use of credit, and a great many businesses make a great deal of money from providing it.  Over the years, some creditors have learned the hard way that lending money to anyone and everyone comes with its share of risk.  Most attempt to strike a balance between lending to as many people as possible and lending only to those who have demonstrated they will promptly repay the debt.

The credit report and the accompanying credit score have become the fastest and easiest way for lenders to determine who poses an acceptable credit risk.  Based on that risk, they can approve and deny loan requests, or base fees and interest rates on greater or smaller degrees of risk.  As a result, it has become very difficult to borrow money without having a reasonably good credit history.  

Love it or hate it, the credit report has become ubiquitous, and disregarding it can have serious consequences for your financial health.  Understanding how credit can work to your advantage, and how you can present a strong history can make a big difference in your financial success.

Good credit can improve your finances

Having good credit can be beneficial to the overall state of your finances.  The single biggest benefit will be the money you save on interest.  From mortgages to credit cards, those with excellent credit will receive the most preferential interest rates.  If you have good credit, you also have considerable negotiating power with lenders who desperately want your business. You may find yourself receiving other benefits such as reduced loan fees, and an expedited application process.

Another area where those with good credit will realize savings is in insurance premiums.  Many auto and home insurers use credit rating as a part of their overall risk assessment.  Those shown to be a lower risk will receive the lowest possible pricing on premiums.

Access to reasonably priced emergency credit is another big benefit to those with excellent credit scores.  Getting an unsecured loan is fast and easy when a lender can see that you always honor your commitments.  If you deal with a lender who already knows you, you might be able to bypass the application process altogether, and receive an increase based simply on your current credit score.

If you wish to start or expand a business, having strong personal credit is an advantage.  Many lenders will not lend to a start-up business unless the owner has impeccable credit.  In addition- though this is not always recommended- a business owner can sometimes access personal credit more quickly and easily than the business can, if a quick cash injection is needed.

Bad credit can hurt your financial health

On the flip side, bad credit can obviously end up costing you a lot of money.  The lower your credit score, the more you will pay in interest.  Lenders who are uncertain of your ability to repay will charge higher interest and fees so they will have collected something in the event of a default.  You may also find yourself being declined for loans, making you unable to take advantage of lower prices on things like houses and cars. Likewise, insurance companies will consider you a higher risk and charge you more for premiums.

If you wish to rent a house or apartment, many landlords will look at your credit history.  If it is unfavorable, they many refuse to rent to you, or require a large security deposit up front.

While good credit may not help you get a job, bad credit can definitely keep you from one.  Many employers now get a credit history on prospective employees as a way of assessing reliability and good judgment.  

Keeping your credit history clean can make a big difference in many aspects of your finances.  By the same token, a poor history can end up costing you a lot of money.  It’s in your best interest to present the strongest score you possibly can.

Good credit can help you realize many financial advantages, just as bad credit can cost you a lot of money.