It’s vital for you to know your credit score. Moreover, monitor it on a regular basis. In doing so, you won’t be caught by surprise at the rating you read. Also, you’ll be able to do something to keep it within a reasonable range. Preferably higher than 670 for your FICO score and greater than 700 for VantageScore.
You may know everything you need to know about your FICO credit score, so you understand that If you go below 670 on your FICO score or less than 650 on your VantageScore, then you’re courting danger. You should be aware of how a very poor rating can affect your life in numerous ways.
If you become careless with your credit, then you could experience any of the following consequences.
● A landlord might consider you’re too unreliable to be a tenant
● An employer may opt not to hire you because he’s not sure if he can trust you
● An argument between you and your better half can erupt if it affects your chances of buying a home or a car.
Despite knowing the side effects, people tend to avoid looking at their credit score for fear of what they might find out. The funny thing is, even if you don’t check it, your credit score has a way of creeping up on you. Fortunately, these are just warning signs. Hence, you still have time to do something about it before your credit score takes a nosedive further.
You’re getting calls from debt collectors.
It’s one of the calls anyone dreads. A debt collector is calling and wants to talk to you. It’s a warning sign you should take seriously and take the time to look into your credit. You should be aware that collection accounts can ding your credit score, moreover, if it’s reported to major credit bureaus.
The types of bills that typically end up in collections are:
● Utility balances
● Medical bills
● Gym subscriptions
In the case of medical bills, don’t wait until the last minute to follow up your bill with your doctor or the hospital. If you just wait for it, you might be waiting in vain. Why? There’s no established practice for when a doctor or hospital would forward a bill to a collections agency. So, be sure and follow it up lest you receive a call from a collection agency.
However, Bruce McClary, a VP at the National Foundation for Credit Counseling for public relations and external affairs, warns against the possibility of a scam. Then again, it could also be a genuine call from a collector, yet it's a wrong number. So, you want to make sure it's valid. How do you do this?
Check your credit report.
Your mailbox has credit card offers from companies you don’t know
Another clue you should watch out for is a sudden increase in the number of mail you’re getting.
Moreover, they’re coming from many subprime lenders who are:
● Financing providers
● Credit card issuers
● Payday Lenders
● Car title loan companies
The stereotype of a subprime borrower would look like this compared to a prime borrower:
● The credit scores of a subprime borrower are lower compared to a prime borrower (more than 700)
● A subprime borrower has high debt ratios while a prime borrower has a maximum of 28/36 low debt ratios
● A subprime borrower is more likely to have an unstable employment unlike a prime borrower who has steady job
● A subprime borrower might have no assets as opposed to a prime borrower who has a lot
● The credit history of a subprime borrower would show late payments unlike a prime borrower who has none
You wouldn’t want to fall into the category of a subprime borrower. Otherwise, you’ll end up with higher interest rates.
You’ve been rejected for a loan application or a credit card.
Rejection for a loan or a credit card is a red flag you shouldn’t ignore. In general, you should be able to get a loan even if you’re credit score is fair. However, you can expect to get credit although your interest rate would be higher. Hence the reason why Scorecure calls a loan rejection as a classic cue you have bad credit. If this happens to you often, then don't be ashamed to check out a copy of your credit report.
In the case of credit cards, it can be a big surprise to find one that will reject your application.
Remember credit card companies are always on the lookout for new customers. Hence, consider it a warning sign you shouldn’t disregard. Rejection isn’t the only issue you might experience with credit cards. It can also happen with existing credit cards you hold.
● Your credit card issuer raised your interest rates
● On the other hand, your credit card issuer lowered your credit limit
● A worst-case scenario is that your credit card issuer closes your credit card
You’re required to give a deposit to a utility company
If you have bad credit, then don’t be surprised if a utility company asks you for a deposit. To a certain extent, utilities are a form of credit. However, instead of paying interest, you pay the month-to-month charges.
Their assessment of a service-user involves looking into your credit history and your score. If utility company perceives you as a risk, then you’ll be asked for a deposit. The type of utilities would include:
However, you might expect to get the deposit back after a year if you demonstrate you’re a reliable payer. According to Citizens Utility Board spokesman Jim Chilsen, this means paying a minimum of nine bills of your utility on time to qualify. In doing so, you might even help boost your credit score. Remember your payment history accounts for 35% of your score. Moreover, you should know gas and electric utilities also report to the major credit bureaus. Hence, use the opportunity to recuperate your credit score. Otherwise, you risk having more significant
● You get a disconnection
● Your attempt to reconnect is costly; you’ll be required to pay how much you owe the utility company, the re-connection fee plus a deposit
● You could end up at the mercy of a debt collector, which will also affect your credit negatively.
Don’t be afraid to take control and look into your credit report. It’s essential to your financial well being. Otherwise, you might be caught off-guard by any of the warning signs. In this instance, ignorance isn’t bliss. It’s a risk you take, and you put your whole life in danger. Remember a bad credit
score can affect nearly all aspects of your life. So, take the initiative and check your credit score regularly.
You’ll be thankful you did.