Most experts agree that the economy is facing a recession. If you do not believe it, just look next door to your neighbors. How many are laid off of work? How many families are afraid of losing their home or have already lost their home? Times are tough, and it is very easy to let your credit score slip when faced with financial adversity. But now, more than ever, you need to strive to maintain your credit rating and work to improve it.
Why? Lenders have lost a lot of money recently lending to people with less than perfect credit scores. They are trying to recoup that loss by tightening up lending regulations. Lenders are looking for credit scores of 750 or higher when they only used to require a score of 720 or higher in order to extend the best terms and lowest interest rates. What does this mean for you, the average consumer? If you had good credit yesterday, that does not necessarily mean that your credit will be viewed as good today even if your credit report and score has stayed the same.
This shift in the way credit scores are valued can affect you in a lot of ways. You may not be able to refinance your house at a lower rate. You may be turned down for credit, and you might have to pay higher premiums on insurance. The bottom line: It is time to pay attention to your credit score and do all you can to protect it and improve it.
Why Good Credit Is Important
If you are not a borrower or if you do not plan to borrow money any time soon, there are still some very solid reasons why you should be concerned about your credit report. Your credit report is a lot more than a report of your financial history and it is viewed by more people than you think.
Employers, landlords, insurance companies, utility companies and colleges may all want to take a peak at your credit report. The information that they gather from your report could cost you. You might end up paying higher insurance premiums and utility deposits. You might even be turned down for employment and housing because of negative information contained in your credit report.
Even if you have decent credit, a better credit score could save you thousands of dollars in interest each year. You see, when lenders extend credit to you, they determine your interest rate according to your credit score. If you have a higher credit score, your interest rate will be lower and vice versa. Sometimes a credit score increase of just 20 points could save you a chunk of money in interest payments.
Times are tough and they promise to only get tougher before they get better. A good credit standing can help you weather the economic downturn. Do all that you can to improve your credit today so that you can provide for your family tomorrow.