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Is Credit Scoring Important?

Some people worry a lot about credit scoring but you may wonder whether it is even that important. It is worth giving the idea some thought as you could find that it will be important to you, perhaps not at the moment but in the future. This is because credit scoring is done by a selection of people and they are people that you may need to impress.

Lenders

A lender will take a look at your credit report to decide whether they feel like they can trust you. They will want to see evidence that you will be able to repay any money that they lend to you. They will look at things like past loans and how well you repaid those as well as at any regular payments you are making, such as for utility bills or phone contracts. They all have their own way of scoring so we cannot know exactly what they are looking for. However, you can take a common sense approach and guess that they will not want to lend to someone who has missed a lot of loan repayments in the past and someone that has lots of loans so will struggle to manage more. They are also reluctant to lend to people that cannot provide evidence to show that they are capable of making regular repayments. This means that if you want to take out a loan, perhaps a mortgage or something like this, you may not be able to get one. If you do get one, it could mean that you end up paying more interest as those with a worse credit report sometimes end up paying more interest than other borrowers using the same loan.

Landlords

Landlords will also want to see that you are capable of making regular repayments. So, they will look at your credit report to see what sorts of payments you are making and whether they feel that shows that you will be capable of making the rental payments. If they see that you have struggled to make payments or that you have a lot of loans, they may be wary of letting you rent their property. This could mean that you will not be able to rent the home that you want or that you may even not be able to rent anywhere at all. Therefore, you could potentially find that it means that you will not be able to easily find anywhere to live.

Employers

Most employers will use a credit report to check out that you are who you say you are. However, for some roles it might be important for you to have a good credit score. This might be for a job where you are working with money, for example. They will not want to see that you have lots of debt as they may feel that they will not be able to trust you with other people’s money. So, you can see that there are some pretty big aspects of your life that you need to think about when you are considering your credit report. It could have quite an impact on certain decisions being made about you and so you need to think hard about making sure that it looks as good as possible. So, it is a good idea to make sure that you do everything that you can to keep your finances in order. Do not take out too many loans and make sure that you repay them on time. Also, make sure that you pay everything else that you need to pay on time as well.