Everyone knows that having a low credit score is a problem, but few people know how or why this affects you. If you’re one of the many people getting lost in the world of financial jargon, here’s what you need to know about the problems associated with bad credit scores.
Credit scores: What are they?
In layman’s terms, your credit score refers to how trustworthy you are as a borrower. This can later impact the amount of money you can take out on loans, effect major purchases, and worthiness to receive lines of credit in the future.
Your credit score is determined by a variety of factors, but it’s primarily impacted by your payment history. It can be easy to swipe the credit card and pay your major purchases with “fake money,” but these increasing numbers will inevitably have to be paid in monthly statements. If you don’t make these payments, your credit score can suffer as a result.
Why is having a low credit score bad?
A bad credit score implies that you’re not a trustworthy borrower. You can receive a lower credit score by failing to make your monthly credit or loan payments or defaulting on these payments. This makes you a high-risk individual in the eyes of a lender or banker. After all, why would they want to lend someone money that they might not get back in the end?
Because banks and lenders won’t want to take a chance on a low credit score, you may be denied lines of credit and future purchases. Many large purchases applications, especially car financing and mortgage applications are determined by the individual’s credit. A bad credit score might get completely denied by the lender. In the best case scenario, you will have to pay higher levels of interest or larger monthly payments. These are costs your budget might not be able to accommodate.
How do I work on rebuilding credit?
A poor credit score isn’t the end of the world, but it can be hard to fix. It’s no wonder that more than 157 million Americans are currently swimming in some form of credit card debt.
Rebuilding your credit takes time and effort. Making monthly payments on time each month will help prove to lenders that you’re able to make efficient, reliable payments. Luckily, early payment options, financing for appliances, and furniture financing are all simple ways to start rebuilding your credit for materials you already need. A furniture financing calculator can help determine monthly costs and allow you to budget for future expenses.
When you want to assess your finances through a furniture financing calculator, rely on the experience of Okinus today. We offer the best in lease-purchase programs, rebuilding credit, and more. For more information on our furniture financing calculator, don’t hesitate to contact us today.