Your Credit Score Isn't EverythingBy Caitlin in Advice
A lot of people let their credit scores define them. Your credit score does not define you, and it does not define your financial situation. It does not give you authority and it does not take authority away from you, it does not rank you against others. All a credit score does is provide a hint to where you stand financially, and how responsible you are with your debt.
How you stand financially can be described by the sum of the following factors:
– Your income
– Your assets
– Your debt
– Your debt to income ratio
– Your loan to value ratio
– Your credit history
– And yes, your credit score
When does your credit score matter?
Your credit score is relevant (but not the deciding factor) behind many new purchases.
– If you’re looking for a car loan, in all likelihood the lender will take a look at your credit score (though that’s not always the case, see why here).
– If you are in search of a home then your credit score will play a larger role, but a good mortgage broker can help negotiate your approval.
– When you want to refinance your home or obtain a home equity loan
– A good credit score is important to qualify for a low interest rate (lenders reward low-risk borrowers)
This is not an example of when your credit score matters!
If you have a bad credit score…
If you have a bad credit score, it is by no means the end of the world. At the end of the day, your credit score is just a number, and it can be improved.
There exist various credit rebuilding programs. Also, If your credit score is very low and you are having trouble even qualifying for credit cards, a secured credit card is a sure-bet option that will work towards rebuilding your credit score.
If your plan is to rebuild your credit score, know that it’s all about strategy. It’s about making responsible decisions, borrowing with the goal of improving your credit rating and living within your means so that your credit score doesn’t take any hits.
All in all, know that your credit score isn’t that big of a deal. If it’s high, then great! If it’s low, you can still sometimes qualify for the financial products you’re looking for AND don’t forget, you can always rebuild it.
Is your credit score low? Are you in need of a loan? Let us help: