Credit score is very important in the business world. This is a key factor in assessing someone if he or she is qualified to certain loans, insurance, mortgages, rents and job opportunities and whether you have a good or bad credit rating. Do not fall into the stigma that people who have bad credit ratings are financially insecure and irresponsible by maintaining a good credit report and score.
Probably you already had a general idea on how a bad and good credit score affect every consumer. A person who has a good score will benefit from low interest rate, fast approval and processing of loans, decent apartment, and better employment.
Knowing how credit score ratings are classified is essential in gaining a more holistic understanding of your financial situation. Credit score ranges are classified from A to D, A being the highest.
Rating A (Excellent)
60% of US population
700 and up score
Access to best interest rates and terms
Rating B (Good credit)
27% of US population
Access to good interest rates but not the best
Rating C (Risky credit)
12% of the US population
Have to pay at least two percentage higher or more from that of the A rating category
Rating D (Very risky credit)
1% of US population
499 and below score
Experienced credit judgments, foreclosure and lien
Have to pay the maximum rates determined by the government
Credit ratings have serious implications in your financial life. As seen from the classification, it will largely determine your future financial transactions and economic standing. A high credit rating means you have to pay less for housing, insurance, interest rates, and loans. This situation opens up an opportunity for someone to save and the savings can be invested to a profitable business venture. This is a plus point in attaining financial security.
There is an ongoing debate on whether credit scoring and rating will have a negative impact to consumers. Businesses on the other hand use them for efficiency. Credit rating is generally used for predicting how a certain person can keep up with the payments. Patterns have been established that people with bad credit ratings are usually delinquent payers and suffered bankruptcy in the past.
If you want a secured financial life, you must be knowledgeable about your credit reports, credit scores, and credit ratings and what are their implications to your entire life. These concepts are not hard to understand if you take some time to read about them.
The internet has provided a venue for you to access information about them and related topics very quickly and easily. You can also regularly check your score and updates on your credit reports through the credit monitoring agencies.
Exercise caution and control in your credit spending. Everything boils down to this. What you sow is what you reap. A low debt means you can easily keep up with payments and a less tendency to have low credit score.