The Importance of Your Credit Report

by : Jay Moncliff

How important is your credit report? Many people do not consider their credit rating as something very important to them in the grand scheme of their life, but there are other people who, understand its great importance, are greatly worried about the issue. The people who should be worried are those who do not put much thought into how their credit report can affect their lives.

What do credit reports tell someone? They help to rate the risk that may be involved in lending you money. Lenders want their money and this report can help them in determining whether you are going to pay back the money loaned or not. A credit scoring process was created to help lenders determine whether you are a good risk or not, ans this number is used to either approve your loan or reject your loan. That is the basic purpose of the credit scoring process, but some more crafty lenders desire to get more loans and so they lend to high risk borrowers, due to the different categories of loans that they offer to you that depend upon your credit score. If you have a lower credit score, then your interest rate will be higher. You can pay up to twice as much as you would pay if you had a better credit rating.

There are many different things that you have to use your credit scoring for. This includes loans for cars, homes, education, and any other large purchases. If you have a low credit score, then it will be very difficult to purchase anything via a loan unless you are willing to pay the high interest rate and payments.

If you want to rent or lease a home your credit score may also come into play. Landlords want some assurance that you will pay your rent on time and this credit score can help you to show them that you are responsible. Keeping your credit score at a good level will allow you to find a quality home or apartment.

Some employers also use credit records to help determine whether they want to hire you or not. Most employers believe that there is a connection between a healthy credit report and the reliability of their future employee. This seems a little far-fetched, but many companies are moving this way regardless. That is just a few of the reasons that you should keep an eye on your credit record.