Some are all about using their credit to their advantage, whereas others do not care about their credit history at all and think it's unnecessary and evil.
I'm on the pro credit side. I think your credit history can be used to your advantage, so why not work to improve it?
As a background for why we care about our credit right now: We are in the very beginning stages of buying a new home. Since we are both self-employed, obtaining a mortgage is a little more difficult. Having a great credit score is one of the areas where we will be analyzed. We also care about our credit because we like to use credit cards with great rewards programs.
Why is your credit score important?
There are too many people out there who have no clue what their credit score is. Too many people also have never checked their credit report. It doesn't make much sense since you can get your free credit score easily and you can even get your credit score online for free.
I think this is a MAJOR problem.
Your credit score and credit history are important. You can leverage them and use them to your advantage. Yes, it is possible to have the credit system on your side and have the highest credit score you've ever had.
A credit score usually means you can keep more of your money because you will receive lower interest rates on your home or car loan. For example, if you have an excellent credit score, you may be able to qualify for a 0% car loan. However, if you had a bad credit score, you may receive a 24% interest rate on your car loan. Yes, that does exist…
Also, if your credit score isn't high enough, you may even be completely denied a loan. You may have to pay higher rates or pay larger deposits because you are deemed more risky.
Overall, a good credit score can help you in life.
In the next few weeks, I will talk discuss what is a good credit score, but for today we will talk about why a credit score is important.
When will your credit score be checked?
How some go about with never needing their credit score or credit report is beyond me. Good for those of you who do not need it, but I think most people enjoy having a credit history.
There are many instances where your credit score and/or credit report may be looked at, and sometimes they have nothing to do with a loan.
Home and car insurance – If you have car or home insurance (read about how our home insurance just jumped 69%!), your rate may be calculated on one factor that you did not know about – your credit score. If your credit score isn't good, then you may actually be paying more because companies may consider you to be more risky.
Employer – This might be shocking to hear, but there are some employers out there who will check your credit report (with your permission). Industries that often check your credit report include those that deal with financial services, chemical, and defense.
Renting a home – If you have decided that you don't want to own a home, do not think that you have escaped having your credit history checked. Your landlord will most likely check your credit history. They will want to know if you pay your bills on time or if you have skipped bills entirely. This will say a lot about you as a renter, whether you want to believe it or not. If your credit history is not something they want to see, you may be denied the rental altogether, you may be asked to pay multiple months at once, or you may be asked to find a co-signer just in case you fail to pay your rent.
Credit cards – If you don't care about credit, then you probably will not care about this one. However, if you want a credit card, especially one with a good rewards system in place (such as if you want to earn a free cruise or free $400 in travel), then you will want a higher credit score. The good reward credit card offers and acceptances are usually only available to though with good or excellent credit scores.
Loans (home, car, etc.) – If you apply for a loan, your credit score and credit history will definitely be checked. Before you are approved for a loan of any sort, the lending institution is going to thoroughly check your financial history so that they don't end up losing money on your loan. There are a lot of expenses that go into owning a home, so getting the lowest interest rate possible is very important.
Related article: Steps To Qualify For a Mortgage When Self-Employed.
Credit Sesame Review (affiliate links below)
I once signed up for a free credit score company who used to have those catchy singing commercials. I thought it they were supplying a free credit score, and I remember being charged months later. I didn't catch the charge the first time either, and I was actually charged a few times before I noticed.
Yes, yes, I know. I'm a personal finance blogger who made a huge mistake!
However, that was a long time ago and I have learned from my mistakes. And that's why I want to do a review on Credit Sesame so that you can check your credit score for free.
If you are looking for a truly free credit monitoring service, then Credit Sesame is for you. Other companies say that they are free, but they usually charge you a fee later on when you probably won't notice. Credit Sesame doesn't ask for your credit card, so there is NO WAY that they can secretly charge you later.
Credit Sesame uses the Experian National Equivalency score, whereas most lenders will look at the FICO score. However, the scores are usually fairly similar.
Okay, so you're probably wondering how everything is free. They must make money somehow right? Well, yes they do. Credit Sesame makes money by showing you different home loans and credit cards you may qualify for. If anyone clicks on these links, then they may make money that way.
Your next question may be “Will checking my free credit score on Credit Sesame hurt my score?” Nope! It is just a soft pull so it will not affect your credit score.
If you are interested in checking your FREE credit score through Credit Sesame click here. It's completely free. Ignore any offers where they ask you to pay for any side offers, because you do not have to.
How often do you check your credit score?
Are you trying to increase your credit score? Why or why not?
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