Your Credit Score Matters

Today your credit score is not just something banks use to determine whether or not to fund a home or car loan. It’s also something businesses use as a component in the hiring process, insurance and cell phone companies as a basis for offering their services and utility companies to assess the financial risk and determine the amount of deposit to secure.

What Is a Credit Score?

There are three main credit reporting agencies: Experian, Equifax and TransUnion. These companies calculate your credit score based on a number of factors including your payment history, debt-to-income ratio and number of active accounts. There is a range of 300-850 for credit scores. Anything under a 700 is considered average or fair, and a score below 580 is considered very poor.

A Poor Credit Score

Having a poor credit score can limit your ability to acquire a loan for things like a mortgage or a car. It can also cause you to get turned down for an apartment or a job. When you have a poor credit score, digging out from under can be difficult due to the limited resources available. Luckily, there are some lenders such as Western Shamrock (  that understand that everyone can have financial problems that cause a temporary setback.

Reeling In Your Debt

It doesn’t take much to overload you with debt. You buy a home, a car and use your credit cards to buy essentials and before you know it, your balances and monthly payments have skyrocketed. Unfortunately, unless you monitor your credit religiously, before you know it, your credit is in the tank.

The good news is that anyone can recover, even you, and turn your credit score from poor to good in a relatively short period of time. First, limit your spending to things you need and do without the wants for a little while. Very often, people get into debt due to their wasteful spending habits. Making a few smart changes will get you back on track and in the green in no time. With your existing debt, make every effort to make each payment on time. This will not only start to move your credit score in an upward direction, but it will also eliminate costly late fees and the possibility of a higher interest rate.

Saving Money

If you are currently scraping for pennies, you may think putting money away in savings is not doable. However, this is very important to maintain a healthy credit score. If an emergency comes along and you have the money to cover it, it’s nothing more than a minor inconvenience. However, if you have no money set aside, that little setback can turn into a financial hardship with long-lasting effects. You can start your savings with a few dollars each week and then as you pay off a credit card add that monthly payment to your savings. Before you know it, you’ll have a nice nest egg.

Unfortunately, your credit score plays a large role in your ability to purchase things at the best price, land a good job and have access to the best companies and the services they provide. Luckily, you can make good decisions with your money in order to ensure that you maintain a good credit score and have access to all the opportunities it affords.