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A Good Credit Report – The Key To Cheap Finance
By: Joseph Kenny
Is your credit report important? There are a lot of people who would not
consider their credit rating as something too important to them in their life.
There are others who, while recognising its importance, would not be overly
concerned about the issue or understand the reasons for its importance. Well, to
those people, they should at least be aware of some of the uses that are made of
credit reports in the world in which we live.
While it may seem obvious to state it, credit reports are predominantly
concerned with assessing the risk involved in lending money to you. Lenders are
obsessed with one thing, getting repaid, and their entire industry revolves
around making this occur. Therefore, they have developed the credit score that
will assess your likely hood of repaying them and this is then used to either
approve or reject your application for credit. While this is the basic purpose,
some more sophisticated lenders desire to get in on an ever larger share of the
market and in order to lend to higher risk borrowers, they create different
categories of loans which people with lower scores can qualify for. These loans
will invariably have higher interest rates and other less favourable conditions
and this will be the price you pay for having a lower credit rating.
Since loans are used to finance homes, education, cars, and most other large
purchases in life, the inability to get access to credit, or only to be able to
get it at less attractive terms and rates, is a substantially reason to care
about your credit report and try to keep it in as good a condition as possible.
Credit reports are also used when you apply for renting or leasing
accommodation. This is usually because the landlord wants to be fairly certain
that you’ll be able to pay your rent as it falls due. So keeping your credit
score healthy at this stage will pay off if you need to be approved for renting
or leasing residential property.
There is also a trend among employer to start using 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. While it
does seem slightly perverse that the very people that will need a job the most
are precisely the ones that can be denied it but that’s the direction things are
moving in.
About the Author:
Joseph Kenny is the webmaster of the UK credit card comparison site
http://www.creditcards121.com/, where you can find a selection of
credit card advice. For US visitors there is also the comparison site
http://www.credit-cards-info.com/
for all US interest free offers.
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