Your Credit Score - Can You Play in the Major League?
I am a sports junkie, in particular I love baseball. I live it, breathe it and can quote you chapter and verse of baseball. So it’s only natural that I would think of a sports metaphor when describing how credit scores work.
Think of a credit score like a batting average. If you go to the plate 10 times and get 3 hits then you have a batting average of .300. Most people consider that a good batting average. When you apply for a loan, a job, utilities or insurance .300 is not so good. Paying 3 bills on time out of 10 suggests you are a poor risk. However, if you pay all your bills on time all the time you are more likely to have a good score.
A high credit score (over 725) allows you to negotiate a better credit deal for yourself. Much like a hitter who has a lifetime average of .350, it suggests stability and dependability along with low risk. When you go to negotiate your new credit account lenders will fall over themselves for that person with a high score, much like a General Manager on a baseball team for someone who hits above .300.
If you are looking for a job, you can expect your potential new employer to do a credit check on you. This is becoming an increasingly effective tool for employers to find the most dependable and reliable employees. The reasoning is that people who can not manage the most personal aspect of their lives, are less likely to be able to help manage their business and expenses.
Your credit score tell a lender what your habits are. A person with a high credit score uses credit very wisely. They know how to live within their means and tend to be a good money manager. A person with an average or low credit score (national average is 692), tends to use credit cards for most if not all purchases, carries large balances (over $5,000.00) on most if not all their credit cards and have many credit card accounts. These factors are more risky so that person is charged more in interest for the higher risk.
Did you know insurance companies today base what they charge for coverage on your credit score? They tell us that people with low credit scores are not only more likely to file a claim but are also more likely to pad that claim. In order to protect themselves and other policy holders, insurance companies set your premium based upon your credit score. Additionally, utility companies will require more of a security deposit for a person with a low credit scores than someone with a high score.
In short, a credit score can be viewed as a grade on your credit behavior. Pay on time all the time and your score goes up. Pay on time sometimes and your score goes down. The ability to spend wisely and only when needed is a behavior that lenders will reward behavior with the best interest rate they have to offer.
We all want a better job, more money, and live a life of abundance.
Maintaining a good credit score can and will help you achieve
that goal. When you step up to the plate with a lender, understanding
your score and how they view it will allow hitting a home run
every time.
