Consumers may not realize the full impact that their credit scores have on their everyday life. Unfortunately, their credit ratings could affect a wide spectrum of services and opportunities for the customers. They will have more difficulties if they do not have higher than average credit scores, and service providers may deny access to credit lines and necessary services such as utility accounts.
All consumers should evaluate their credit regularly to determine if there are issues on their credit reports. Even a small discrepancy can decrease the credit scores significantly, and the person won’t have access to loans, credit cards, and mortgages when they need the products.
Table of Contents
Defining Access to Credit Lines
The credit scores achieved by the consumer defines whether they have access to new credit lines or not. If they want to get a credit card account, the consumer will be turned down if they do not have a higher credit score.
If they have a credit score that is below 700, the consumer is limited to store cards and higher interest credit card accounts. If they do not improve their credit scores, they will not get a great credit card account. Consumers start plans to improve their options by understanding your credit rating now.
Getting A Job
Some job positions require the candidate to have a higher-than-average credit score. For example, if they want to work in a bank or financial institution, the employer will conduct a credit assessment when they evaluate the candidate’s credentials.
Any job vacancies in which the worker will handle money or financial records require a higher-than-average credit rating. If the applicant doesn’t have great credit, the employer will view the candidate as a risk to the company and will not extend a job offer.
The Interest Rates Available Through Personal Loans
Higher credit scores give the consumer accessto lower interest rates when taking out personal loans. Even if they want to take out a small loan for something as simple as buying for a sudden home repair requirement, the lender will not give them a loan if they have terrible credit scores.
Traditional lenders complete a full credit assessment to determine if the consumer qualifies according to their credit ratings, debt-to-income ratio, and their income. If the borrower needs to get a personal loan in a hurry, they won’t have fast access to the cash.
Traditional lenders could turn them down completely if they see the borrower as a risk. Lower than average credit scores and a lower income can prevent borrowers from getting a personal loan when they need it the most, and traditional lenders are more likely to turn down borrowers if they do not have higher credit ratings.
Auto Insurance Rates
When presenting a quote for auto insurance coverage, the insurer will conduct a credit assessment for the auto owner, and they base the monthly premiums on the consumer’s current credit scores. The other contributing factors include the age of the driver, the age of the automobile, and the value of the automobile.
If the auto owner purchases a sportscar and must have an auto loan, they will pay almost twice as much each month. Statistics show that the auto owners with credit scores under 700 pay far more for their auto insurance each month than an auto owner that has higher credit scores.
Renting an Apartment
When renting an apartment, all applicants must provide personal information about the applicant’s job and income. They must also include their Social Security number and consent to a criminal background check and credit assessment. Once the property manager has confirmed that the prospective tenant is not a felon, they review their credit history and determine if they pay their debts on time.
Property managers conduct the credit assessment to determine if the applicant is a risk to the property owner. If they have low credit scores, the property manager may not approve the application for the apartment.
Buying A Home
Consumers undergo a credit assessment when taking out a mortgage, and their credit scores must meet the requirements for the preferred mortgage program. For example, buyers who want to use a conventional mortgage need a credit score of at least 620. For an FHA mortgage, they must have a credit score of at least 580. Some buyers consider a USDA mortgage because there is no minimum credit requirement, but most lenders require a score of at least 640 to be eligible for the USDA’s automated underwriting system. Check the USDA map to learn more.
However, these credit scores may help them qualify for the loans, but the borrower will face higher than average interest rates and down payments. They will not qualify for first-time home buyer’s programs that eliminate the down payment.
The buyer may also face higher than average down payments, and they may have to pay 10% down instead of 3.5%. Their credit ratings have a direct impact on how much they will pay overall for a new home.
Buying a New Car
Consumers complete an application and consent to a credit assessment when buying a car. It is possible to buy an auto loan with bad credit, but the consumer will get a higher interest rate, and they may have to pay a lot more down just to get the loan. Most auto lenders want borrowers with credit scores of at least 700, and consumers with lower create scores are less likely to qualify for a new automobile.
Access to Smartphone Services
When setting up a smartphone service plan, the service provider conducts a credit assessment. If the consumer has bad credit, the service provider will require them to provide a down payment for the phone services. Some down payments could be as much as $400.
Consumers evaluate the many ways that their credit scores affect their everyday lives. When they start credit lines, the account holder must pay their payment on time or they face late charges and a decrease in their credit scores. If they have charged-off accounts or accounts in collections, they have a negative impact on the consumer’s credit ratings.
Lower than average credit scores prevent them from getting personal lines, credit lines, credit cards, and even utility accounts. By managing their credit more proactively, the consumers can get access to vital services and credit lines without great difficulties.
