Thursday, May 19, 2011

Great Credit Is Essential... by Ed O'Brien

Today I have a guest post by Ed O'Brien over at I found a lot of useful information on his blog. Check it out... Even in the present economy it is wise to be educated about your credit and finances. It is much more important these days since employers are checking credit as well. And if it helps save money down the road... even better. Be prepared and know what's ahead so you can make better decisions.

Great Credit is Essential for Financial Stability and Intact Budgets

The importance of good credit has been plastered all over the news as of late because the reality is that tougher times have called for tougher measures. In order to maintain a solid financial foundation, consumers must take into account their credit worthiness in addition to their income and expenses. Unfortunately, too many consumers have been ignoring their credit histories and do not realize how much their credit score affects their overall financial life.

 Credit worthiness is essentially how reliable you have proven yourself to be with your financial obligations. A lender will use your credit history in order to make decisions about whether or not they feel safe lending you money or lines of credit. While other factors are considered in a financing approval process, a good majority of lenders will base their decisions on credit histories and scores – if not to make the actual decision then to determine interest rate and other fees.

 Maintaining Good Credit Matters to Your Wallet
Even if you are not interested in buying a home, a new vehicle, or getting a loan, having good credit matters. Your budget, the essence of your financial life, can be dramatically affected by a low credit score. Today, companies of all types are jumping on board with the notion that good credit scores matter. If your credit score is too low, companies that provide utilities, cell phones, and rental homes will require a hefty deposit before services can be established. That means more money is coming out of your pocket upfront just so you can access basic, everyday services. Even potential employers are relying on credit checks before making personnel decisions. If your credit score is low but your competition for the same position has better credit, it is likely you will not get the job.

 For those who do plan on financing a loan, mortgage, or new vehicle in the near future, a low credit score can result in an immediate denial. Even if you can get approved for financing, you may be paying way more than necessary for the financing opportunities. Low credit scores and bad credit histories often result in higher APRs for loans and additional fees just so lenders can cover their risk. Your financing options may also be cut considerably as some lenders won’t even look at applications from those with marked credit histories.

 How Good Should Credit Be?
The highest possible credit score a consumer can obtain is an 850. Typically, lenders will extend their best offers to those with credit scores of 730 and better. While consumers will scores downwards of 630 can still get financing, they will likely not be able to score the same deals as consumers with higher credit scores and more solid credit backgrounds.

 It is in every consumer’s best financial interest to check in annually with their credit score from Equifax, Experian, and TransUnion or prior to seeking any time of financing or line of credit. Credit scores cost a small fee but are worth the price knowing where you stand financially. If credit improvement is necessary, plan to start well in advance of actually needing a loan or new credit card. Despite what many companies are saying who claim overnight credit repair is possible, there is no simple fix for bad credit scores. Only time and a dedication to resolving debt and credit issues will work. Make sure you pay all of your financial obligations, on time, every time if you want to see a marked difference in not only your credit score but also your overall financial life.


Ed O’Brien is a seasoned writer in personal finance, specializing in credit repair. You can find more of his articles located at

~Thanks, Ed! :)

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