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Credit reports are predominantly concerned with
assessing the risk involved in lending money to you.
Lenders worry only about one fact, getting repaid, and
the entire industry revolves around making as large a
profit as possible.
Therefore, the credit score has been developed to give
lenders a formula for judging the likely hood of
you repaying them. This credit score
is then used to approve or reject your
application for credit. Those with the highest scores (ie
good credit) get the cheap financing rates.
Profit is the basic purpose,
however some lenders want to get a larger share of the
financial market and in order to do that they need to lend to
a broad and diverse group of people including higher risk borrowers.
The lenders then have created different categories
of loans which people with lower scores can qualify for.
These loans always have higher interest rates
and other conditions that are less favorable to you the
borrower This will be
the price you pay for having a lower credit rating. Not
good credit means higher interest rates, shorter
borrowing time and no bonuses.
Loans are used to finance homes, education, cars,
and most large purchases. The inability to
get access to credit, or only to be able to get it at
the least attractive terms and rates, is a substantially
reason to care about your credit report and keep
it in good credit standing at all times. Most
people who have chosen to buy something want it now with
no hassle.
Only good credit allows that.
Credit reports are also used when you apply to rent a
home
or to lease equipment, cars and other items. This is because
like the banker, the
landlord wants to be sure that you'll be able
to pay your rent when due. So keeping your credit
score good will pay off if you need to
rent or lease residential property.
One of the highest uses of good
credit is the obtaining of credit cards. When you have
good credit you will have credit cards thrust upon you
and in this manner you always are given the best deals,
lowest rates, most miles and lowest interest.
There is also a trend among employers to use credit
ratings when assessing job applicants. The reasons they
are making use of credit reports are of course different
for every employer but there is a consensus that a
healthy credit report and a good past record of meeting
financial commitments is a good sign that the job
applicant is someone reliable and worth employing. Today
the large employers almost always pull credit reports
before the final interview. It helps them narrow down
candidates quicker and easier. So now along with good
grades, good employment history you had better have a
good credit report.
by Dan Keating The author has over 20
years experience in the business and financial fields
and is the author of many web sites offering financial,
credit, credit card and real estate information.
All The Information You Need Is In Our Credit Secrets
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