Your credit affects more than you think. These are just a few aspects of your financial life that are affected by your credit rating

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Employment Opportunities

Employers in today’s market investigate your dependability along with your financial responsibility based on your credit rating. Employers look to see how you manage your personal finances to determine whether they can entrust their finances with you as an employee.

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Renting Instead of Owning

The “American dream” is to own a home, but more importantly than having something to call your own is the financial repercussion of renting instead of owning an appreciating asset. The money that you are spending each year in rent could be going into your investment instead of your landlords.

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Interest Rates on Mortgages

A typical home mortgage can cost hundreds of thousands of dollars more through the life of the loan if you are buying a home with bad credit.

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Automobile Financing

An auto loan can cost thousands more in interest if you are buying the vehicle with bad credit.

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Improving your credit score

Paying your bills on time is the single most important contributor to a good credit score. Even if the debt you owe is a small amount, it is crucial that you make payments on time. In addition, you should minimize outstanding debt, avoid overextending yourself and applying for credit needlessly.

In general, a score may improve, if you:

• Pay your bills on time. Delinquent payments and collections can have a major negative impact on a score.

• Apply for and open new credit accounts only as needed. Don't open accounts just to have a better credit mix - it probably won't raise your score.

• Pay off debt rather than moving it around. Also don't close unused cards as a short-term strategy to raise your score. Owing the same amount but having fewer open accounts may lower your score.

• Close accounts you don't need. A high total credit limit may signal potential overextension. A total of three or four cards -- including gasoline or department store cards -- is usually good.

• Keep balances low on credit cards and other "revolving credit." High outstanding debt can affect a score. Try to keep your total account balance below 30% of your total available credit. For instance, if your cards have a total credit limit of $2,000, keep your total balance under $600.

• Correct any incorrect information that might appear on your credit report.

• Minimize the number of inquiries on your credit report. Don't apply for multiple credit cards over a short period of time, or for a card you're not likely to get.

• Rebuilding Damaged Credit

• Bad credit can happen to good people. Don't despair. There are ways you can get your credit back in shape. But you have to start working on it today -- and keep working hard to show potential creditors that you're serious about getting your credit back in order. As you do so, your credit score will improve, resulting in better credit offers and a substantial savings in money. With patience and timely repayments, you'll likely be able to build a new credit history that creditors will look upon favorably when making decisions about your ability to handle even more credit.

• If your credit is severely damaged, or you have a very short credit history, apply for a gasoline credit card, a department store card, or a secured credit card. Use the cards, and pay the balances on time.

• Use your new accounts in moderation. And make payments that are more than the minimum. You can keep a small balance so that your positive payment history will continue to show up on your credit report.

• Keep your balances low. Avoid carrying a balance that is more than 30% of your credit limit (creditors may view it as excessive debt that you may not be able to stay current with).

• Consider asking for help. If you can't qualify on your own, ask a friend or family member to cosign for a small loan or credit card. If you can stay current on a major credit card account or small auto loan, this will speed up the process of re-establishing good credit on your own.

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