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Credit score relevance in today’s economy

By Janet Lacey
Published: Monday, May 10th, 2010

When you fail to pay your loan back like you were supposed to, many things happen with your financial status. First, your credit history takes a turn for the worse. This will lead to an immediate drop in your credit score and eventually, you will have problems getting approved for loans altogether. Hence, you should take care and plan in advance so that you don’t have to be in such a position in the future and can in fact manage with your finances. Being financially secure matters, especially in a crumbling economy like the one we are in right now.

It is definitely a challenge to keep up payments today, but that doesn’t mean you give up altogether and resort to not making any payments. On the contrary, you should work to find a solution and something that can help you out and allow you to make payments without you having to struggle in the process. Cut back on unnecessary expenses and only set aside money for what you absolutely need. Over time, this will reflect on your credit score and your creditors will be more than willing to lend you money, even during the time of crisis.

Keeping a good credit score today can be extremely rewarding and can help you in a lot of ways. In fact, many people realize the benefits only now, when creditors are looking out for people with good financial backing to provide loans to. You get to enjoy priority whenever you file for a loan application and place a request for your money. Even for credit cards, all your applications will be approved before even the other ones with poor scores are followed up on. Hence, these are clearly the kind of benefits that you would want to make use of and not want to miss out on.

If you got a pay cut, then the need to keep your credit score is all the more relevant. Your credit company might hike your interest rates if you fail to make payments. The small sacrifices that you make now will be significant at a later point in time. In fact, a lot of people are okay with missing payments over some other expenses. This kind of financial policy is what lands them in trouble. Hence, don’t succumb to unnecessary expenses and instead, work towards ensuring that your score remains largely unaffected and not bogged down by your carelessness.

In case it is really hard to make the payments, talk to your creditors. Inform them about the missed payment so that they can excuse you and not report the absent payment to the credit bureaus. You won’t believe it, but simply talking to the credit company can ensure that you don’t have anything significant to worry about later on in the future. Your credit score will not go down and you might earn time to work harder and get the money that you urgently require. In many cases, people have been able to come out of the financial crisis without having any problem to worry about as such.

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