How A Good Credit Score Can Help You [Infographic]

Much has been said about the credit industry and there are endless debates about the merits of the credit score system — especially how you build credit. However, the fact of the matter is that our economy (at least here in the U.S.) is largely based on consumer spending that happens to be based on credit and debt. Indeed, a bad credit score can hurt you in unexpected ways. A good credit, score, though, can open doors and save you money. This infographic from CreditLoan.com, a company offering financial advice on bad credit loans, provides a look at how a good credit score can help your financial life.

A Good Credit Score Can Save You Money

The main benefit comes in the interest rate that you receive when you take out loans. While a great deal of debt never desirable, most people have to borrow for things like homes and cars. As you can see from the infographic, if you have a good credit score, of between 750 and 759, you could save as much as $43,709 over having between a 620 and a 659 on a home mortgage loan. There are also savings if you get a better rate on an auto loan, and you can save money on your home equity loan.

One thing that the infographic fails to point out is that you could be denied a loan altogether with poor credit, especially in the current climate. On top of that, the infographic points out, your insurance premiums could be higher, and you may be required to pay higher security deposits. Landlords may also decide not to let you rent if you have a poor credit score. So, even if you aren’t planning on borrowing any money in the near future, your credit score can still impact your financial future.

Building a Good Credit History

Being responsible with your finances, and using some credit in a calculated way, is the way to build a good credit history that can help your finances down the road. While you may not want to borrow for anything, you may have to. It’s about making calculated credit decisions as part of your overall financial plan. The infographic offers a quick overview of what goes into a credit score (the score system in the U.S. and Canada are very similar), and you can see how important your payment history is. If you want to have a payment history, unfortunately, you have to make payments — on time and in full, of course. It might be wrong, but the system actually punishes people who live a cash lifestyle, and then suddenly decide it’s time to get a home mortgage loan, or who find that their insurance premiums are higher because of a lackluster credit score.

Checking Your Credit History

It is a good idea to regularly check your credit history. In the U.S., you are entitled to one free credit report each year from each of the major credit bureaus via www.annualcreditreport.com. In Canada, you can have as many free copies of your report as you want, as long as you request the report in writing and have it mailed to you. When you check your own credit report, it won’t reflect on your credit score. In Canada, your score isn’t affected no matter who checks.

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In the U.S., though, a hard credit pull by someone else when you get a loan, will lower your credit score to some degree. You will have to pay for access to your credit score.

Make sure you keep up with your credit history, and check for errors and signs of fraud. And do what you can to keep a good credit score. Your finances will thank you.

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Comments

  1. says

    So true about the fact that a bad credit rating could possibly mean you are going to be declined for almost any lending product.

    Carol

  2. Bill Payour says

    Fuck you Credit companies and your fucked up ways. go fuck yourself

    • Marki says

      Right on Bill
      I’d like to see every1 one of them blown up & employees hanged from street lamps.
      There all a bunch of fucking creeps if you don’t have credit your nothing
      I ‘m going to beat the next motherfucker to within a inch of the fuckers life for anything that says i have bad or no credit,then just maybe they will get the hint i don’t give a shit anymore.

  3. jg says

    Credit scores are a scam. All three companies have a score but that doesn’t mean anything to the bank. They go through a “middleman” that runs an algorithim on your history and comes up with another score. And if you have no credit use in the past 6 months, your screwed, No Score.

  4. Randolph says

    Seems to me advice like this is what led to the credit crisis being what it is today. Also seems to me like all you’re trying to do is comply with the rules and settle with debt, no matter how big or small, for the rest of your life. Is that the way you want to live your life? Your kids, for that matter? Having to endure a constant drain on funds with little to no benefit to yourself? I have an idea: change the rules, or vote for someone who will change them, and for God’s sake, stop letting corporations push you around! A healthy financial outlook, common sense wise, SHOULD HAVE NO DEBT IN THE EQUATION.

  5. Nagana Geddit says

    Isn’t it fascinating that banks are required by law to follow the rules that are published and yet done without penalty.

    Consumers have to comply with phantom scoring schemes that are not regulating and that no one but the banking industry supports and you are defenseless against this system.

    Where did Fair-Isaac get the legal authority and power to control lives? Why is there no other resource to computer credit worthiness. Sounds like an industry paid for monopoly. Yet they still exist.

  6. Tony says

    It is a fraud. It fails to account for most of the good things, for example, paying your rent on time, your electric bill on time, and the like while at the same time is penalizing on any ‘bad’ thing, like missing a car payment, or having your wife torpedo a credit-card.

    I deem it a failure.

  7. Brian says

    Dear Miranda,
    This infographic is grossly misleading. Employers may only check a credit report with your permission and then do not have access to your credit score, but rather only to deliquent accounts and the like. However, employers do not have access to credit reports. To gain access to a credit report or score you must be a lender and furthermore must be lending to the investigated party. This misinformation has gone on far too long.

    Quote: “The Consumer Data Industry Association (CDIA), the trade organization of the credit reporting agencies, has done the same. In fact, according to Stuart Pratt, President of the CDIA, ‘None of the credit reporting agencies sell credit scores to employers, so credit scores don’t influence any sort of employment decision.’”

    http://www.mint.com/blog/trends/credit-score-employment-06192010/

  8. says

    Credit is just another word for debt. There’s this huge conspiratorial collusion occurring across a number of industries, and a “sophisticated” philosophy used to ensure that people remain debtors for the vast majority of their lives. It’s one of the most ***** up and insidious problems with modern living.

  9. says

    a good credit score isin’t proof of “financial prudence,” it means your a good little ant and you take out nice loans and are dependable to always keep paying them.

    You keep a balance on credit cards, and you probably make regular payments on other big loans (house, car, boat, etc.)

    Act “prudent” and do things like make big purchases with cash and kick the credit cards and your score won’t go up.

  10. says

    Brian: It’s true that the infographic could have been more clear. And it is true that employers must get your permission before checking your credit report (and they don’t get your score). However, I think the point the infographic is trying to make is that more and more employers are interested in your credit history, and some employers — especially those that deal with sensitive information or those hiring for security — are interested in knowing whether you have certain vulnerabilities. But, even though employers don’t check your credit score, if they do check your credit report, they can get a good idea of what your score might be, and see your overall credit habits.

  11. JiN says

    Employers which check credit reports are not worth working for. I have gone through a few initial interviews and once they request I sign a release so they can get my credit report. I pull myself out of the interview. I have had a company call me back and wanted me to accept the job without the need for the credit report. I still declined. I was able to find an employer that doesn’t play any of these games. I am a software developer and do not see how my credit report should affect my 15 year Work Experience.

    Miranda, I don’t see how being late on a monthly payment to my credit card is a vulnerability to my employer? Or even a security risk? You would get more information by retrieving a person’s criminal record. Getting caught shoplifting is a problem, selling stolen goods is a problem. Know what is not a problem? Not being able to pay your mortgage for a few months because you were unemployed. If you wanted to stretch it you can say that ordering 12 CD for a penny under 10 different aliases is a problem but a minor one.

    This is as idiotic as the Phone Quiz that companies had employee take a few years back. I was in a company that adopted this policy and I was not required to take it until I took a 3 month leave of absence and returned to work. A month later I was approached by HR that I had to take this quiz. After pestering me for weeks and a off-the-record remark that I was going to get kicked out on my butt, I took the test and intentionally failed it. “Yes, I would approach the co-worker stealing from the company and request a cut of it or I would report him”. Stuff like that. Immediately after the test I handed HR and my manager a resignation letter.

  12. says

    Some employers are interested in using your report to determine if you are in enough financial distress that you would consider embezzling or taking bribes for proprietary information or other activities. And, of course, insurance companies use a version of your credit report and score to determine your likely level of responsibility. Like insurers, some employers are starting to equate responsible behavior in finances to responsible behavior in other areas of life. I’m not saying it’s fair or even that it should be happening; I’m just saying that’s the way it is.

  13. JiN says

    Glad it’s happening now instead of 10 years ago because with my skill set I can easily pick and choose where to be employed. I have been also lucky to find great employers who don’t try any of this nonsense. 10 years ago I had to deal with agreements that every piece of code I write (even during my off-hours) belongs to the employer. With this round of interviews, it was the credit reports. What is I have a dispute on there with porno manufacturer who sent the wrong type of edible underwear? Is that something I want anyone seeing? As a former System Admin I can tell you that some of the stuff employees (especially at the higher levels) leave behind on their workstation or laptop is unbelievable.

  14. says

    Very good idea. Concise and to the point. It helped me understand it better. Thanks.

  15. says

    A good credit score is something that you can prioritize having if you want to see a good boost in the right direction in your financial life. Most creditors are willing to negotiate if you have the right credit.

  16. says

    Hello, i feel that i noticed you visited my blog so i got here to return
    the choose?.I’m attempting to find issues to improve my website!I suppose its good enough to make use of some of your ideas!!

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  1. [...] students underestimate the importance of good credit. However, building a good credit history is more important than many people realize. Good credit can mean that you save money on insurance premiums, and that [...]

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