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Negative items affect the interest rates you pay
Your credit history and your credit score will determine what interest rate you pay on a home, auto or other loan or for a credit card card. In fact your credit history will determine if you will even be approved for credit. Most lenders use credit scores and cutoff points to determine who gets the best rates. For example, the best mortgage rates are reserved with people with credit scores over 700. Even one minor inaccurate item on your credit report could result in reducing your credit score 25-30 points. Most credit card companies will not approve an account if there is any derogatory information of any kind on your credit report. This means any inaccurate derogatory account on your credit report will usually result in a credit denial for a low interest credit card. The difference between a $150,000 mortgage at 6% versus 9% is $307 per month. Over the life of a 30 year mortgage that amounts to over $100,000 in extra interest payments! Credit report errors and identity theft fraud does not correct itself. YOU MUST BE PROACTIVE in correcting these errors and inaccuracies even though you were the victim of crime. Professional guidance in correcting this kind of misinformation can be a great help in correcting your credit report and restoring peace of mind.
Employers may check your credit and it could cost you a job
Employers check your credit report as part of a pre-screening process. Employers must get your written consent to do this but this language is often buried in the fine print of employment application forms. Imagine if an employer saw a bankruptcy or judgment on a credit report or a delinquent account that was not yours or which should have been deleted form your report because it was more than 7 years old. The results would not be favorable, particularly if the position to which you were applying was one of financial trust. In many instances, and employment laws notwithstanding, you may never have known that this was the reason for the denial of employment. An inaccurate credit report may be the only thing standing between you and a good job. Further, an employer cannot be expected to know that negative information on your credit report may be the result of fraud or identity theft. Professional help can greatly benefit you in clearing these types of issues and document them for the record.
Insurers often base rates on your credit
Although many states have recently enacted laws to curb the practice, insurers routinely obtain credit information (there are actually special insurance credit reports and scoring systems) in order to determine risk. Risk determines what rates you pay and even whether a particular insurer will offer you a policy. Insurers base decisions on your credit rates on research that claims a correlation between negative credit and prospective insurance risk and claims history. Many auto and homeowners policies involve such a credit review. Negative or derogatory credit information may cause you to pay higher insurance premiums or be denied coverage altogether. Consumers must therefore carefully review and manage all aspects of their credit history so as to avoid the financial impact that negative information may have on insurance matters. Legal actions and judgments or delinquent accounts which are not that of the consumer or which are the result of identity theft or fraud can have a serious impact and could cause you to be denied insurance coverage or to pay higher premiums. |