How your credit rating affects your quality of life

Many people never bother to keep an eye on their credit rating; some never check theirs at all.

It’s easy to underestimate the value of a credit rating, but in truth; unless you belong in the high-income club and can afford to buy everything with cash, your credit rating dictates the quality of life you live, the following are some of the known ways:

Bargaining power, borrowing:

Have you ever done your shopping in a market place? Notice how several traders were vying for your attention, each trying to convince you that theirs is value for money, best quality etc? Well, in such an instance, you are in a position of power; they have the same product and you have the simple task of choosing between them. If you exercise your power, often you’d be able to either bring the price down or get more goods than originally quoted.

If you look closely, similar patterns are repeated in almost all aspect of life, when it comes to credit (i. e. loans, credit cards, etc), a credit rating is the preferred currency for just how valuable a customer you’re.

If you took the time to count, you might find that there are hundreds of credit card providers out there and they all want more customers.

If you have a good credit rating, like buying goods in a market, you’re in a position of power; credit card providers are willing to outbid each other in an effort to get your business. This is expressed via attractive niceties such as 0% balance transfer, 0% interest on purchases, air miles, reward points and many others.

If you have bad credit however, none of these niceties will be available to you, in fact, most lenders will simply stay away from you. Those that lend to you on bad credit cards will typically charge you double the interest a good credit customer pays.

Special deals and promotions:

Lately, shops and supermarkets are also getting in on the act; in an effort to sell you that new fridge or sofa, retailers are willing to give it to you on an ‘Interest free period’ often with nothing to pay upfront. But wait, you can only get this deal if you have a good credit rating; those with bad credit will have to pay the full price upfront.

When it comes to buying cars, although some lenders will accept people with bad credit, it’s on higher interest loans, in the end the person with bad credit pays more for the same car.

Employment:

This one is a bit bizarre but some employees find it necessary to check your credit rating before deciding whether to give you the job or not. Perhaps it’s to determine whether you’ll steal company funds or perhaps it’s to determine whether you’ll demand a pay rise due to your financial iniquities!

As you can see life costs a little more if you happen to have a bad credit rating whereas if you have a good one, you might even benefit from all the gimmicks lenders use to lure new customers.

With that in mind, work on your credit rating, if you already have a good one, use it to your advantage!