People often take the ability to obtain a credit line as a right and not a privilege. When you are first getting started in your job search you have a clean slate of no credit. Then something happens on the journey to gaining a credit score there is this thing in between called life. Yep, you heard me – life happens to everyone. The unforeseen things that can drag your credit score to plummet to the abyss.
Real Life Happens
What are the things they can ruin your credit score? I know we all like to think that credit cards are helping us, but they can get you into trouble very easily. I will use a real life scenario for you the reader. Imagine you have been able to pay all of your bills on time until one day you get laid off from your job. Once this happens let us add some more ingredients to the pot. What else can go wrong from here? Funny you should ask that question because things usually cascade from a job loss. If you are unable to live off of your savings. I am just for the sake of this article going to say that you do not have a rainy day fund.
Watch out for the medical bills
The bills they were being paid on time now are ranked in order of importance. The basics like food,clothing and shelter being at the top of the list. The credit card that you used now has a monthly bill for you to pay every month and lagging behind on the once timely payments can lower your score. Think about it these card companies report your payment history to the credit bureau. I want to fast forward to another real life scenario that no one wants to experience, but the fact is medical bills are bankrupting Americans.
Live and Learn
The moral of the story is just one major medical setback can leave you in financial tatters. The thing to remember is that the medical bill does not necessarily have to be made by you personally. It could be your spouse or your children. The point is if you are the responsible party and medical bills can total into the thousands with just one weekend hospital stay. This is where having good credit comes in sometimes you can get a short term loan or an installment loan to cover medical cost. This is one more example of why you have to care about your credit score. The higher your credit score the more likely your chances of being able to secure a loan to get you out of that unforeseen tight spot. The credit score gives you the ability to open new lines of credit.
A Credit Score Affects Other Things
There are some states that use credit score as a criterion when hiring an employee. The credit score really got blown to bits during the financial crisis of 2008.It looked as the whole world was about to drown. There were foreclosure signs all over the country people where losing their homes. People for the most part learned to downsize behind that fiasco. They also learned a valuable lesson which is that employees are expendable commodities. A company no longer has the loyalty that they had a generation ago.
The Illusion is Gone
The ship has sailed on retiring from the company that you dad or mom had been employed. We all learned the value of the credit score and having access to that credit can help pull you through some tough times. Many Americans relaunched themselves in a second career phase during this time. There were many who went back to school,finished an unfinished degree or started their own small business. When it comes to starting a business the first thing that a bank is going to check is your credit worthiness. Hey, I did not write the rules. I just have to play by these rules as do all of us in order to get breathing room.
Please Remember that If you Survived the 2008 Meltdown you can Smile
I guess that most of you thought this article was going to be about the 600 credit score versus the 800 credit score. Instead, this article is to point you out of the direction of the pitfalls and show you without sounding preachy as to why having a good credit score can be beneficial. Also I’d like to share the fact that there are legitimate people who will share credit repair tips for free. YouTube has a host of channels that specializes in this very subject. There are radio hosts like Dave Ramsey or Clark Howard which are very popular. I would like to remind you that anyone who lived through the 2008 financial crisis knows the value of credit and what it is like to be without it.
Please note that I received no money to mention Dave Ramsey or Clark Howard. I just happen to find that they give sound advice, and give leads to the best resources. I am guessing that if you are engaging with this article that you are looking for more little nuggets of information.One thing you can be sure of the guarding of your credit score must be discussed early on with your children. I would not recommend letting them start college and ending up with a lot of student loan debt. No parent wants that for their offspring. It is up to you to make sure that everything that is on your credit report belongs there. If you just have not checked your credit score in a while feel free to do so as soon as possible.This is a great way to check and make sure no one else is trying to access or steal your identity. This is sad, but too often true in the time of the digital age so try to keep up. It will be more beneficial if you also put an alert on your credit if you find a discrepancy.