The Difference Between Good and Bad Credit
The Difference Between Good and Bad Credit
It may sound unfair but the truth is, people with different credit standing are treated differently. For the most part, those with good credit are treated better than those with bad credit.
Individuals with good credit standing are offered store cards and credit cards without any interest on their payback. They may also be approved with car and home loans with a minimal interest of about 3%. Minimal or no interest at all translates to extra savings.
In the meantime, people with bad credit are faced with a different scenario. They are either rejected or charged with very high interest when they apply for loans or credit cards. In effect, they end up paying double the amount of their purchase.
One’s credit rating does not depend on the amount of income generated. A person with a very high income and some extra savings may still be turned down or required to pay high amounts of interest if his credit standing is not satisfactory. In the same way, someone who is not earning a lot but has an excellent credit rating may easily get a loan without making any initial payment or even paying any interest.
What all these simply means is that your credit rating is equally important than the amount of money you are making. Bear in mind that you will not be able to put your money to good use if your credit ranking is low. The worst part is, even with a high salary, you will be putting plenty of your money to waste just to afford high ticket items such as a car or a house.
Credit rating otherwise called FICO score is determined by three major credit agencies namely Experian, Equifax and Transunion. Your rating can fall within 250 to 900. Any score lower than 640 is considered fair while a rating below 600 is deemed poor. If you are aiming for good credit, obtain a score in the mid-600 or low-700. For an excellent rating, get at least a mid-700 ranking.
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