Most people don’t learn about credit scores in school. These same people often don’t get the news from their parents, either. This can leave credit scores in the realm of the mysterious – arbitrary numbers that they never even see, which controls aspects of their lives in ways they don’t comprehend. For a lot of these people, a credit score can seem kind of like a conspiracy, something outside of their control, but something which “doesn’t really matter” in the real world. The thing is, credit scores do matter. You can ignore yours all you want, but if your credit score is low, it will have lots of negative impacts on your life, even if you don’t notice the problems or don’t understand where they come from.
A credit score is based on all of your credit behaviors. Every time you pay a bill (on time, or not on time), it impacts your credit score. Every time you open a new credit card, this impacts your credit score. If you generally only use credit for responsible reasons and live like a financially literate, responsible adult, your credit score should be high. But if you miss a lot of payments and live off credit cards, your score will be low. But why does this matter?
Your credit score is what determines how much loans will cost you. If your score is high, your potential lenders understand that you are responsible, and that you will likely repay your bills on time. Therefore, they charge you lower interest than they would charge someone with bad credit history and low credit score. For people with low scores, lenders might deny loans outright. In either case, a low score holds people back. They pay tens of thousands of dollars more for simple borrowing over the course of their lives, and sometimes can’t get the money they need at all.
These people might not realize that it’s happening. Expensive interest might seem like a cost that everyone has to pay, when really it’s a price hike specifically for people with bad credit history. Over the long term, this might be the difference between buying a house or sending your kids to college.
Credit repair is fortunately very possible. It can be accomplished on your own, or with the help of professional services that do exactly this kind of work. As a person who uses credit, you’re entitled to demand accurate management of your own credit history. This means that you can ask the credit reporting agencies to check their records when they have record of something negative in your history. Right or wrong, the agency is required to check all the steps leading up to this negative mark. Oftentimes, they won’t be able to complete this process, and the negative item will simply be deleted. You can also resolve the issues on your own, by paying old debts and then requesting that the items be removed. Over the long haul, don’t rely overly much on credit, pay your bills on time, and try to spend money like a responsible adult. This will push up your credit score and make your financial life a lot easier.