It’s Not So Much Who You Are as Much as It Is Your Credit Score
Not to sound too much like an aging, gray haired individual but “back in the day”, people in a community knew who you were because of your pedigree. What is a pedigree? When speaking about humans, it is “a register recording a line of ancestors”. It was mostly based on your name. Names had clout in communities years ago. You were known by those to whom you were related. Did your family name have a good reputation in town or had your name been spoken about in a negative fashion frequently? Yes Johnny, we will loan you money because your father is Tom, he is the Train Master in the rail yard. Why yes Jennie, if you need money to buy that new car, we can do that. Your mother-in-law is a member of the Order of the Eastern Star with my wife. Hey Dan, I understand you are looking for a job. Sure, we will hire you, you were the best starting quarterback for our high school that we have seen for years.
That was how many business decisions were conducted and decided upon, “back in the day”. As with most things in our world, change happens. Referencing a person’s pedigree is no longer the predominate way of making business, employment, or financial decisions. There are specific processes employers, financial institutions, business owners, and others utilize when making decisions. What does that process include? Checking an individual’s credit score!
Forget about your I.Q., how many degrees you have or how many cattle you possess. The most important number you have is your credit score. Many decisions today are based upon your credit score. When you get a loan, the bank checks your credit score. When you apply for a job, most employers will check you credit score. When you are wanting to rent an apartment, landlords want to know your credit score. Today, your credit score is your pedigree!
Sadly, most young people today do not know this. Unless a wise parent, a sage relative or friend or an astute Extension Educator may have had an opportunity to teach young adults about the importance of credit scores, their score will probably be ruined before they ever start their decision filled financial lives.
How can you maintain a solid pedigree, I mean, credit score? There are some basic but extremely important steps you need to consider to maintain an excellent credit score.
According to the Federal Deposit Insurance Corporation (F.D.I.C.), many criteria go into building a positive credit score including:
- Your bill-paying history, current unpaid debt, and the number and type of loans and accounts you have.
- How long you have had your loan accounts open and how much of your available credit you are using.
- If you have had a debt sent to collection, a foreclosure, or a bankruptcy, and how long ago.
- Whether you recently applied for new or more credit.
Good credit scores suggest to banks and other financial institutions that you have handled your finances well. A credit score predicts how likely you are to pay back a loan on time. A scoring model uses information from your credit report to create a credit score. With a good credit score you could be offered better loan terms than someone with a poor credit score, such as a lower interest rate or more time to pay back your loan. A low credit score indicates there is a higher risk a person will not repay a loan. Landlords may look at your credit scores for the same reason. They want to know if you are likely to pay your rent on time. Some prospective employers also consider credit scores when hiring. Credit reporting agencies provide guidance on what is considered a good score. You can check with your lender on their credit score requirements.
The FDIC website listed in the reference section has numerous tips and suggestions for attaining and maintaining a solid financial pedigree. Establishing a solid credit score takes time but in the long run, it creates a much less complicated life and allows you many more opportunities to pursue. Possess an excellent credit score and have a positive pedigree