CONSIDER THIS: Most people know they have a credit score, but many people fail to grasp how much their score could be costing them. Liz Pulliam Weston, best-selling author and MSN Money columnist, estimates the lifetime cost of bad credit at $201,712.
As soon as consumers open their first credit card, they begin establishing a credit score. And it follows them throughout their life. A good credit score can be the ticket to loan approvals and the best interest rates. But a poor score can do far more than raise the interest rate on a loan – it often determines rates for everything from homeowner's and auto insurance to credit card accounts. It can even be a factor in obtaining employment, healthcare and cell phone service.
If the current economic woes weren't bad enough for a consumer, the worst part is, that may just be the beginning - the woes actually could cause a person's credit score to drop. Consider This:
- If losing a job causes a person's credit score to tank, future job opportunities might be in peril - especially if the company checks his or her credit score
- Losing a house could make renting an apartment difficult after the landlord checks credit
- Even if someone with bad credit finds a place to live (while paying a larger deposit because of that poor credit score), good luck with the utilities - most of them also check credit scores
Similar scenarios are happening more frequently as many in Georgia and nationwide are experiencing a decline in their credit scores.
You may want to know:
- What factors are used to determine someone's credit score?
- What is considered a strong credit score?
- How can a consumer improve his score?
- How often should consumers check their credit?
- What financial behaviors will trigger a decline in someone's credit score?
- Does checking your credit too often hurt your score?
- How much available credit should people keep?
- What percentage of available credit is it advisable for people to use?
An insider's perspective:
Blake Graham, assistant vice president of lending and business development for CGR Credit Union in Macon, says that he encounters people almost every day who have been denied a loan request because of a poor credit score. While most are looking for help to get back on track, Graham says that people with poor credit scores may be looking at the highest rate in addition to facing other consequences.
"Even insurance companies and utilities are pulling credit," Graham adds. "A poor credit score will affect not only your finances, but everyday life as well. It could even determine whether you are eligible to receive water, power and gas service."
Graham advises consumers to take several steps to protect their credit scores:
- Maintain on-time, consistent payment history on all credit
- Never use more than 50 percent of available credit
- Monitor credit reports carefully
For people already struggling with poor scores, Graham suggests calling creditors to establish a payment plan and get on the road to resolving the problem. Graham warns that it may not be an overnight fix, but he does offer a word of hope. "Most credit bureaus focus on the last 24 months," he explains. "If you resolve the problem, then you can start rebuilding your score."
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*Views and opinions expressed on these videos do not necessarily reflect those of Georgia Credit Union Affiliates. |
