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What your credit score can do for you

By George Hauser
Published: Saturday, October 30th, 2010

All of us are aware what a credit score is but not a lot of us are actually very mindful on the benefits of a good score and the pitfalls of having a poor one. One of the reasons why a lot of us are trying very hard to maintain a good credit score is our want to get approved of a loan instantly and an additional credit card as well. When you are able to present a good credit score to lenders or credit card companies then there is not a bit of a worry whether or not you will be approved or not for you surely will have the approval. Not only will you have a guaranteed approval but you too can enjoy good rates. Since you have proven your creditworthiness, lenders are feeling very confident that they can have their investment back. This then seem to be a win-win situation; the borrower getting approval at low rates and the lender having the guaranty that they will profit on you.

When you are able to maintain a good credit score then you actually are earning some savings. People with bad credit score pay a rate which is two to three percent higher compared with the rate given to those with good score. So with a good credit score, you actually have a savings of two-three percent. When summed up in a span of one year then you saved a great deal of cash.

In the business world, if you want more profit then be willing to invest more. But there are times when the needed extra capital is not available. The loan is to the rescue but with a low score, your dream of expansion might already be next to impossible. But lenders may find it difficult to measure the credit score of a person as a businessman and as a private citizen. It is then recommended that you keep two separate accounts with good credit score of course.

The credit score isn’t just important when you want to have a credit card, loan or mortgage approval. Employers nowadays are actually using credit scores to determine whether a person in for the job or not. It is believed that a person who can manage his finances well can also manage his work well. But this practice had been criticized since it is an obvious violation against a person’s privacy. Besides, one’s credit history and financial woes has nothing to do with his work performance. While some companies stand firm that it is an effective way to gauge a job applicant’s working performance, some states gave already adopted a law that penalizes companies who run credit check on their applicants. This fact should not convince you to stop working on having a good credit score for you’d never know what else it can do to you in the future.

The best step you should take when building a good score is knowing when to spend and spending only within our means and resources.

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