TopConsumerReviews.com is a world-leading consumer product review site. We provide detailed reviews and ratings for thousands of products and services.

 

Go To Reviews >

Why Is A Good Credit Score Helpful?

A consumer's credit history is the barometer for their financial health.

There was a time when good credit was only important in securing a loan for a large purchase, such as a house. Nowadays, a person's credit history affects every aspect of their life, from jobs to rates on car insurance. Consumers with poor credit will have a lot of doors closed to them.

There are three major credit reporting agencies in the United States: Equifax, Experian and TransUnion. Each agency compiles a credit report on consumers based on their financial histories. Financial histories include bank accounts, credit card accounts, auto loans and even bankruptcies and foreclosures. Any time a consumer has taken out credit, it is included in their report.

Credit reporting agencies use that information to assign a credit score to consumers. The score is ascertained through calculating a mathematical algorithm, which extracts data from the report to generate a three-digit number. Scores can range from 300 to 850. Consumers who have a credit score of over 700 are considered financially stable and desirable individuals with whom to conduct business. Individuals with scores under 500 generally do not secure new loans or credit, and can be subjected to much higher interest rates than their financially-stable counterparts.

There are many reasons why a good credit score is helpful.

In addition to resumes and interviews, employers also have begun to give credence to potential hires' credit histories. In a recent nationwide survey, 69 percent of employers admitted to using an applicant's credit report as part of the hiring process. The Fair Credit Reporting Act requires any employer who wishes to view a potential employee's credit report to first seek permission from the person. Persons with higher credit scores are seen as more honest, hardworking employees and employers will lean toward hiring someone with an excellent credit score over someone with a poor one.

Credit card companies also use a consumer's credit score to determine whether they wish to extend credit to that individual. Consumers who have excellent reports can expect to receive unsolicited offers from credit card companies quite frequently. Credit card companies want to do business with those who are financial stable, offering lower interest rates and other incentives to encourage them to open accounts.

Mortgage lenders also tend to provide better interest rates and loan terms for those with a good credit score. When applying for a mortgage, most brokers prefer consumers whose credit score is at 700 or higher. These are borrowers who have solid financial lending histories and are seen as very low risk for defaulting on a mortgage. Those with scores under 700 can find themselves subject to higher interest rates, which in turn results in larger monthly payments.

Utility companies also determine whether to provide service based on a person's credit score. Most utilities are paid for after they have been used by the consumer, making this a very risky venture for the utility company if a person has bad credit. Utilities have little recourse other than stopping service if a person fails to pay for the gas, electricity, water, phone or cable services they already have used. If a consumer has a bad credit score, it can affect whether a utility company chooses to provide service. TopConsumerReviews.com has reviewed and ranked the best credit repair services available today.

Go To Reviews >

Top Consumer Reviews Articles

TopConsumerReviews.com provides unique articles that you won't find anywhere else on the internet. These articles are designed to help you make the most informed decisions possible.


Credit Reports In The News

Hard vs. Soft Credit Inquiries: What's the Difference

A soft inquiry (or soft pull) occurs when your credit report is not being used to make a lending decision, so it doesn't count against your credit score. For example, if an employer were to pull the c...

Published:  Fri, 15 Feb 2019 19:00:00 GMT



John Ninfo: Employment credit screening, trailer park rent and more

New York Governor Andrew Cuomo has recently proposed that New York join a number of other states that have restricted the use of credit reports as a required screening procedure in connection with emp...

Published:  Sun, 17 Feb 2019 22:01:00 GMT



Capital One Offers Free Business Credit Reports for Everyone

At NerdWallet, we adhere to strict standards of editorial integrity to help you make decisions with confidence. Many or all of the products featured here are from our partners. Here's how we make mone...

Published:  Thu, 14 Feb 2019 05:53:00 GMT



This Week In Credit Card News: Free Business Credit Reports For Everyone; Debit Card Use Dropping

The number of consumers who use debit cards for purchases has declined steadily since 2011, the year following enactment of the Durbin Amendment, and now stands at 54%, according to a newly released r...

Published:  Fri, 15 Feb 2019 12:14:00 GMT



Elevate Credit: Does A Positive Earnings Report Signal A Lucrative Entry Point

Elevate Credit is an online subprime consumer lender that IPOed in April 2017. Since then its shares have materially underperformed peers. In February 2019, it released a positive 4Q 2018 earnings ...

Published:  Thu, 14 Feb 2019 13:22:00 GMT




- View Full Site -