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How does Your Credit Score Influence Your Life?

By Janet Lacey
Published: Sunday, September 20th, 2009

The credit score is something like a mark sheet which shows how good a financial standing you have. It’s more like a current index of your financial stability. So, how does this 3 digit number influence one’s life? It does in more ways than one. It is kind of unsettling to know that this number is actually controlling every move that you make. But that is the way of life and you have to admit that it makes you wiser.

The credit score is based on a lot of factors. It depends on how much debt you have, how long you have accumulated the debt, what’s your credit history, how much of your credit limit have you used and so on.

So how does it go about influencing your life? , In a number of ways actually. Let’s try and illustrate a few scenarios.

You go out shopping on a weekend. The mall is offering a grand 4th of July sale and everything looks too good to resist. You pick up a lot of stuff which you actually don’t need and then when you get to the line at the cashier, you realize that you are already up by around 50% of your credit limit. A nonchalant person would just go ahead and buy that stuff. But a person who really knows about the credit score would be prudent enough to walk away.

Think about the time you went shopping for your car. What would you tell your salesman? Are you going to take a loan? Make sure you elucidate to him whether or not you want a loan. A credit report enquiry from the car company will surely put your score in the soup. You don’t want to unnecessarily do that to your score!

You are a newly graduated business school hot shot who got into a firm on Wall Street. You are earning a lot. But it’s really not a good idea to go out and buy that Ferrari right now. What with your fledgling credit history and all. Take your time and work out your priorities. Invest in something which will pay you enough to buy that car in two or three years. And at the end of it all you will have a car, the asset and the money that you will accrue from it every year.

Your credit card debt is due this month. And you really don’t want to part with any from your party fund. This is not a good idea if you are thinking of leading a happy and contented life in normal society. Any default on payment will be put on your record for almost seven years. And this will drastically affect your credit score and hence ability to get future loans.

These were just a few examples of how the credit score can actually influence your daily life. There are many more events that can occur due to this number. But as long as you are prudent and self contented, you shouldn’t have a problem. You can satisfy your need but not your greed.

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