Why Financial Responsibility is Important
In today's modern world and ever-growing global economy, it's
significant to take into consideration the value of remaining on top of
your financial responsibilities.
Whether or not you maintain and take seriously financial elements to
your overall dynamic of credibility is essential, and can easily mean
the difference between purchasing that used or new car you're interested
in, mortgaging a house, and even being at a disadvantage for employment
opportunities. How is this possible you ask? Believe it or not, some
employers - such as working in a bank - will require a
report, especially when it's dealing directly with, or around
money - especially when there's large amounts involved. Credit and
financial credibility literally define your eligibility for many
milestones in life, outline the likelihood of personal and financial
independence - and success!
What is the purpose of a Credit Score?
A credit score is typically accumulated overtime, however, the average
individual 'starts with' around 400-500 at the age of 18, with 300
the lowest and 850 being the highest.
How your credit is impacted by financial decisions and responsibilities
is an integral concept to better managing your life and finances.
A few examples of financial responsibilities that directly impact your
credit score are:
Car Loan or Leases
House Mortgage or Loan
School Loans, Repayment History, and Amounts
Credit Card History, Payments, and Current Salary
An interesting fact, which is quite significant and a lot of people
don't realize it; is that there's actually 3 major credit reporting
agencies (on a state level), these three are Equifax, Experience, and
Transunion. To add to complexity, these scores are obtained through
different sources or measures - and at times will reflect different
than one another.
Therefore, before you go diving into a free Credit Score report system
and getting yourself tangled up in a 'mess', take into consideration
differences and monetary or fiscal value of 'soft' and 'hard' credit
report 'hits'. That is, outside the annual limit, an individual is
indeed 'penalized' for inquiring about his or her credit score more than
once. Why you ask? Well, for starters, this is a common system most
typically used by lenders, so even though you personally are not, it's
important to accept that this system was primarily designed for such.
Each credit report 'request' (known as a query) is going to considerably
have some level of 'negative' impact or deduction of your credit score.
That is, as such a behavior is equated to the similar instance in which
a bank or other lender for example has inquired about your eligibility
and current credit score in lieu of considering you for a loan or 'line
Putting all of this information together, this means that the more
'credit hits' you acquire, the lower your score will become. No lender,
within reason of logic, will want to consider someone for a loan at an
optimal standpoint if this individual is for some odd reason
continuously requesting loan consideration from a multitude of lenders
or banks in the forms of car loans, personal loans, etc. In fact, in a
way it makes the individual look 'desperate' or unreliable, unstable, or
questionable in terms of intentions and reliability to repay the debt.
Although your salary plays a heavy role throughout credit reporting
(ability to repay) and loan decision-making, likewise does your credit
report history based on previous loans to payment history.
A credit score, credit-card, or small personal loan (even student loan)
is a very ideal 'starting point' for an individual to begin accumulating
good credit, paying on time, and setting themselves up for success for
the long-term when the time arises that you wish to finance something
much larger or greater than just a car or $3,000 line of credit - for
example, a $250,000.00 house.
Responsible spending is responsible researching. Always do your due
diligence to ensure the stability and protection of your financial
security and future!