As you graduate from college and slowly become a young professional one topic that will always be apart of your life is your credit rating. You may be a strong willed individual that has resisted the temptation provided by credit card companies in college, or you may be the opposite- an individual that obtained a credit card and used it to make all kinds of purchases that simply racked up debt & now you have eliminated your credit card. I have bad news for both of you, a credit rating is very important for young professionals.
As promised a few days ago I will spend more time discussing credit cards & credit in general and whether both really are as horrible as some would claim. The following are the three most important aspects of your credit rating as a 20 something.
Landlords run a credit rating review before they allow you to move into a rental unit
A landlord takes a major risk when they allow a 20 something into their rental property. I know you’re a college graduate so that should make you a genius, right? Well that’s not how older people feel about us. The landlord wants proof that there’s a great probability that you will be able to pay your monthly rent. You could argue until your blue in the face about how you’re a good person but that doesn’t mean anything to a landlord if your credit rating sucks.
Employers check your credit rating to see if you are reliable
You may not see it as a big deal if you have a history of missing credit card payments or closing credit card accounts, but your potential employer definitely will. Put it this way- say if 100 young professionals apply for the same job, if a good percentage of them have a good credit score and you don’t then the odds are against you for getting the job.
You could argue with the employer that it’s not fair that you’re being judged by your credit rating but the bottom line is that there are at plenty of other college graduates behind you going after the same job.
Banks look at your credit rating when giving out any type of loan
Loans for bad credit are hard to come by especially during this current economic recession (yes I know you shouldn’t blame the recession for everything but I think it’s fair to say that bank loans have been affected by the recession). How’s a bank supposed to loan you money if they see you have a history of not making credit card payments? Or a history of late payments?
The problem is that loans in general are hard to come by, but what if you want to start a family and purchase a home? You will almost likely not get approved for the mortgage if your credit rating is in the toilet. Even if you want a loan to buy a car you found for a hot deal, your bad credit rating will prevent the bank from loaning you a couple grand.
A good credit score is more important than you may have thought before reading this article. Don’t worry I won’t leave you guys here in the dark, I will continue writing about the topic and offer tips on improving your credit rating and any other topics you guys want me to research.
photo: adactio
{ 4 comments… read them below or add one }
In some places, insurance companies can even base their rates on your credit rating. Mmm… having to pay more for car insurance because you missed a few payments on your credit card? That wouldn’t be fun! Another one that doesn’t really seem fair, but the insurance companies see people with bad credit as a higher risk for reckless behavior… so they charge accordingly.
I’m really glad your writing about this because your credit score is more important (in my opinion) than most people realize, especially college students. I have friends in college who just stopped paying their credit card bills each month and it just blows my mind why they would do such a thing. It’s not even that they can’t afford the payments, it’s just that they’re too lazy to pay it!
The significance of credit rating has risen for young professionals as employers have begun to use credit rating as a gauge of their credibility and responsibility.
Wonderful read, thanks. It’s much easier to understand now what a credit score is truley about and how it is important. Even if not in debt, keeping a well balanced credit score is vitally important.