Importance of good credit
October 20, 2008 – 3:08 amExtensive usage of plastic money has given rise to innumerable credit card defaulters. The number of credit card defaulters has increased over the years and to keep pace with the number of defaulting consumers, several credit repair agencies have struck root.
There are two main factors which have contributed to the rise in the number of delinquent accounts. They are easy accessibility to debt and the high interest rates charged by the creditors. The high rate of interest however, does not prevent consumers from availing debts.
If you have delayed in making payments to the creditors, it shows on your credit report. However, the moment you start paying regularly, your credit score improves over time.
A bad credit indicates bad repayment habit and this does not go down very well with many people with whom you have to interact on a daily basis.
Given below are some of the instances when the importance of good credit is realized.
- Entrepreneurship
If you are planning to open a small business of your own, you need to have sufficient funds at the time of start up. If you are planning to take a loan, there may be chances of being refused one. This is true if you have not maintained a good credit in the past.
- Utility Services
In many cases your credit is required to avail utility services. Utility services may include cable, telephone, water, cell phone, electricity etc. It has been observed in several instances that to get fresh electricity connection, credit history is checked.
- Transportation
If you are planning to buy a car with the help of a loan, your creditor will check whether you have a good credit or not. This in turn will influence the creditor to decide your loan amount as well as the rate of interest.
- Shelter
Taking shelter in any area can also be impacted by a credit score. In the event, you do not have a good credit history, a mortgage lender may lend you money at a very high rate of interest or in the worst case scenario your loan application may be refused right away.
- Employment
There are many employers who conduct a credit check prior to hiring the employees. If it is found that the prospective employee has not maintained a very good credit record, he may be refused employment.
