It’s becoming a hassle for most Americans to keep up with their credit. After a very bad recession (that we are still feeling the effects of), many people find that their credit is worse than they thought. They had to make tough decisions, often coming down to survival or keeping your credit intact.
For a lot of people, credit cards were the only thing keeping them afloat financially. Some are the victims of fraudulent activity that was beyond their control. Although there are ways to fight credit card fraud, it’s not exactly impossible to prevent. Others may have had a hard time paying medical bills. Neither the credit card companies nor the reporting agencies are sympathetic to the circumstances that lead up to missed payments.
Under these circumstances, it’s easy for some to write off their credit altogether. Yet, ignoring the problem doesn’t make it go away. Once you become aware of just how many ways your credit impacts your life, you’ll realize that no matter how much you hate it, it’s a necessary evil.
Renting
Landlords often do a credit check to make sure you’re responsible enough to rent an apartment from them. The level of the credit check may vary. Some of them only look to see if you pay your bills on time. Most of them will want to see your entire credit history. This is because they need to figure out if you’re responsible. You prove your responsibility by paying your bills on time. A missed payment can wreck your credit score, and it can mean that you won’t get the apartment you know you can afford.
Mortgage & Loans
In order to get nice rates for a mortgage, you need to have a good credit score. If your score is poor, it’ll make owning a home very difficult.
That’s not to say it’s impossible to get a mortgage with a less than stellar credit score. It does need to be within a certain range in order to qualify for a loan. If it’s below the minimum, you’ll find it impossible to get a loan – especially one with a reasonable percentage rate.
You may not think you’ll ever need a loan for anything besides a house, but if you choose to buy a car, you’ll find that it’s the same as getting a mortgage. A bad credit score can make it difficult to get financing from an auto dealership.
Insurance
Did you know your insurance rates are based on your credit score? It’s illegal for life insurance companies to base your rates off of your credit score, but all other insurance is fair game. This includes car insurance. Even if you manage to get a car without a loan, you still may be punished for having a poor score by paying more than you should in insurance fees on a monthly basis.
Employment
Just like landlords, potential employers will check your credit to make sure you’re responsible. To them, paying your bills on time means you’re reliable.
Unfortunately, this practice is not illegal. While it’s reasonable for working in the financial sector, for others it seems a bit drastic. You may be the perfect fit for the job, but if they look at your credit report and see a poor history, they will choose another candidate.
Travel
This will sound silly, but it’s true: having a good credit score may affect your ability to travel.
Credit card companies often reward their best customers with points they can use to travel, or frequent flyer miles. These points (or miles) are often cashed in for tickets to destinations like Tokyo, Montreal, or even Los Vegas. How do you get these points?
You purchase things on a credit card, then pay it off. For every dollar you spend, you get a certain amount of points. There are periods where you can get bonus points, and meeting certain standards can get you tens of thousands of points at a time (example: spend $3000 and get 50,000 travel points).
Since these points are equal to dollar amounts, you can cash them in for tickets with participating airlines. These tickets are often discounted especially for card holders. The more you spend, the more points you get. The more points you get, the more you’ll be able to travel.
Yes, you can pay to travel to exotic locations out of your own pocket, but add up the costs. It’s actually cheaper to do it through a credit card rewards program, which is why so many people clamor for them. If you don’t have good enough credit, you’re stuck paying cash for your vacation. How much time will it take you to save up for that trip?
You may need a credit card as a secondary form of identification in order to apply for a passport. If you don’t have one, you’ll have to use another combination of documents to prove who you are.
You may write it off as something you don’t need but when your credit score starts impacting your ability to relax and indulge yourself, you’ll find it’s much easier to just play the credit game.
Solution
There are many ways to repair your credit. You can do it yourself, but most people prefer to have well reviewed credit repair companies do it for them. They can do what you can’t do. It’s one thing to send a few letters to the credit reporting companies asking for something. It’s another thing entirely to have lawyers working on your behalf. They are trained in both federal and state laws, so they have a better chance of repairing your credit report than you do by yourself.
You can’t deny that credit impacts parts of our lives that it shouldn’t. Your ability to get a home, car, job, and even travel are all impacted by your credit. No, it isn’t fair, but is the way the system works.