Why Your Credit Rating is So Important

Although we have heard it over and over and over again just how important it is to have a good credit score, somehow we just never seem to take it to heart. If you could count all the opportunities in life that pass you by because you have a less than perfect credit score, you just might be motivated to do something about improving it.

Credit Scores – the Good, the Bad and the Ugly

So then, what is a good credit score and how high does it need to be in order to get the best interest rates on loans, the lowest premiums on insurance and a good chance of getting that apartment rental or job you are applying for. Actually, you should always shoot for a credit score which is above 700, the higher the better. If your score falls below 620 you will be considered a poor credit risk and if you get any credit at all it will be at sub-prime rates. Any score above 760 is considered to be the upper echelon and will qualify you for almost anything.

Credit Applications

As noted above, most people are looking to improve their credit score because they are looking to have credit extended to them. This could be credit cards (revolving lines of credit), mortgages, car loans, personal loans and even installment plans on dental or medical bills. Any time you want credit extended to you, it is imperative that you have a score well above 620 points, over 700 if possible, or you may be denied or subject to extremely high interest rates.

Lower Insurance Payments

Then there is automobile insurance to consider. That auto you are driving is extremely expensive and insurance companies look at your credit rating as a risk factor. Other types of insurance underwriters also base premiums on creditworthiness. If you are looking for private health insurance, for example, your credit score will certainly factor into rates as well as the condition of your health and any preexisting conditions you may have. The lowest possible premiums on any kind of insurance, including homeowners’ insurance, are always offered to those with excellent credit scores.

Apartment Rentals

This is another area where people get into difficulties if their credit score is less than perfect. Apartments, houses and any type of property that is for rent is an investment for the landlord and he/she will want to make money on renting the unit. If you expect to find decent housing, you will need to have a good credit score in order to show that you can afford to pay the rent and that making timely payments is important to you.

Employment Opportunities

Finally, a good percentage of Americans just don’t realize how many employers run your credit before they even call you in for an interview. Along with your work history and criminal records, your creditworthiness indicates what kind of moral character you display. Whether or not you will be handling money or other valuables, your creditworthiness is a reflection of who you are.

It is about time we realized that having a good credit score is of vital importance in almost every area of your life. From applying for loans to getting good premiums on automobile insurance, your credit score will impact how much you pay, and whether or not you are even eligible for credit. Take the time to learn what you can do to improve your score if it is below 700 and also get a free copy of your credit report and score to make sure there are no errors or cases of identity theft. Your whole way of living will improve by building good, solid credit.


Americans Saving More and Spending Less

It would seem as though three years of economic turmoil would be enough to send anyone over the edge, but Americans are still being beaten down day after day with the debt crisis that is assailing not only us, but the entire world it seems like.

According to finance professor Werner De Bondt and his associate Richard H. Driehaus from De Paul University Center for Behavioral Finance, we are in a vicious cycle from which there appears to be no end. Americans are starting to feel the weight of the problems besetting them since the mortgage meltdown of 2008 ushered in what is being called “The Great Recession.”

Actually, the pair feels that, for the most part, Americans have three different reactions to the current financial problems besetting our economy. Some are angry at the debt crisis and the way in which government attempted a bailout. Others are expressing anxiety, not only about their own future but the future of our economy on the whole. A third group of people are simply resigned to the situation and feel that there may be no way out.

In a recent article in the Personal Finance section of the MSNBC website, De Bondt is quoted as saying that Americans “have had it…..with this whole thing,” referring to the elite group of Washington politicians and Wall Street big businessmen. He says that our worries are only natural if you look at what has been transpiring over the past few years.

Literally millions of Americans are out of work and have no hope in the near future of finding a job. Companies are downsizing, homeowners have been foreclosed on and millions of loans have gone into default. It seems as though the bubble burst just as many of us were pulling ourselves up out of debt that we incurred when the credit card wars lured us in.

For years, vying for our business, credit card companies were mass mailing credit cards to consumers around the country in order to get them to sign onto high interest rates. Unfortunately, tens of millions of us fell into the credit trap which led to bills we just couldn’t pay. For a while all went well until they kept raising our limits to the point where even paying the monthly minimum was beyond what we could afford.

At some point many people became aware of what they were doing to their credit scores and simply tore up those cards. Now they are paying the price for it because the economy is still on a downward spiral and it is becoming increasingly difficult to keep up with current bills let alone pay off old debt.

Actually, people are behaving fairly rationally, according to George Loewenstein, economics and psychology professor at Carnegie Mellon University. They are spending less, saving more and recognizing that the economy is not recovering as quickly as Washington said it would. The time has come to rely more on our own resources and less on government – a message which appears to have been heeded.

If you are looking for some sound advice to help you weather the current debt crisis, the first thing to do, as Loewenstein observed is save more and spend less. Secondly, keep tabs on your credit report. If you are like 90% of working class Americans, you are probably worried about whether or not your job will still be there tomorrow.

This means it is time to sincerely think about paying down the debt you have without running up any more. Make sure that your report details debt that is truly yours and not an error or case of identity theft. By keeping a tight reins on your finances and monitoring your credit, you should be able to withstand the current problems until the economy bounces back.


Invitation Only Credit Cards for the Elite

Most of us are struggling just to make ends meet and to keep current on bills as they come in each month. We worry that if we don’t keep a decent credit score we may not be able to borrow money in case of an emergency and we worry that we won’t get a good job, a good apartment or will not be able to arrange medical payments ‘on time’ if we can’t maintain a decent credit history. Not so for the super affluent as they are invited to carry a credit card that is by invitation only.

What Is an Invitation Only Credit Card?

According to Yahoo! Finance, most of the major credit card companies and several banks such as Chase have their own versions of an invitation only credit card. Unfortunately, little is known about these cards as they are cloaked in secrecy. Only those members who have been privileged with an invitation actually know why someone would want one. What we do know is that many of them come with an extremely high initiation fee, sometimes as much as $5,000, and that they may carry high annual rates as well. It is known that the American Express Black Centurion is one of those cards that carries a $5k initiation fee and the annual fee is $2,500. Oddly, most of us would like to have a credit score worthy enough to have a $5,000 credit limit on a basic card!

What Do You Get For All That Money?

Besides the prestige of having an invitation only credit card that is offered to the wealthiest card holders (or at least those who have probably charged hundreds of thousands of dollars in a single year), there are reputed to be some pretty nice perks along the way. Among the ‘known’ benefits are travel perks above and beyond those frequent flyer type miles such as extra special service at hotels around the world. These cards hold private discounts and as mentioned, free upgrades for all sorts of travel arrangements and accommodations. Some of credit card companies also hold dinners for invitation only cardholders at which they are given a ‘bag of personalized loot.’

Achieving a Happy Medium

While most consumers could never hope to be a member of such a select few who would qualify for such a swank invitation only credit card, we can work towards achieving a happy medium. By keeping tabs on our credit score we can work our way up the credit card ladder in order to perhaps qualify for a credit card with low annual fees and perhaps even a fairly high credit limit. Unless you have a bank account with perhaps $20+ million which would qualify you for one of those ritzy bank invitation only credit cards that is about the most you can hope for – a credit card which has low rates and a high limit.

Take the time to get your free annual credit report to keep tabs on what could be affecting your credit. If there are any errors, contact the credit reporting agency (Experian, Equifax or TransUnion) that reported erroneous information. Make sure that you are not the victim of identity theft and then look at how your creditors have been ‘grading’ you. Have you been paying bills on time and in full? Did a creditor report that you had paid off a loan? These are the types of things you should be looking for that will affect your credit score and future credit. You may never qualify for an invitation only credit card, but why would anyone want one? Don’t you think they could purchase so much more than they are getting with that $2,500 annual fee? I guess we’ll never know.