Why it is important to have a good credit record

Why it is important to have a good credit record

There are many reasons why it is vital to maintain a good credit record. While people might realize the difficulties a poor credit record might have been some areas of their life, they often don’t realize how a bad credit rating can affect other important aspects of their life such as employment.

Detailed below are some of the reasons why it is important to have a good credit record.

Getting a loan

Many people find themselves in need of a loan for a car or to cover unpaid bills or  to pay for emergencies, however, this might not be possible if your credit record is not good enough; if an individual finds it difficult to get credit, they will find themselves paying out excessive amounts in interest rates.

Starting a business

If a person wants to get credit to start their business then having a good credit record is absolutely essential. Creditors will not look favorably upon a business that already has a bad credit history, and if they do accept them as a customer the individual can expect the credit terms to be restricted, which will limit how quickly the business can grow.

Finding an apartment

Another area where a poor credit record can prove to be an obstacle is when an individual is looking for a new apartment or for a home. Without a good credit rating, there is little prospect of getting a mortgage, and many landlords are likely to hesitate at taking a person with a poor credit history on for a tenancy; if they do they might request additional security.

Employment

A lot of people do not understand that a bad credit record can affect their employment, especially if they are looking to work in certain industries. For instance, if an individual is looking for a job in the financial industry, they can reasonably expect their potential employers to check their financial records. Moreover, some employers check credit records as a matter of course when shortlisting candidates, especially for senior roles.

Lower interest rates

If an individual has a good credit rating, they’ll pay less in interest rates. When a credit card company or other financial product company is considering an application, they’ll have to look at a person’s credit record. If it is good, the applicant will get favorable terms, however, if it is poor they’ll only be able to get credit at a much higher interest rate, if at all.