Posted on Sunday, 13th June 2010 by Rebecca Ortiz
In today’s difficult economic times, having a good credit score is absolutely essential. With good credit it is relatively easy to secure loans for housing, vehicles, education and business investments. However, an individual with bad credit will find themselves in the position of paying cash for all of life’s luxuries, most of which they will never be able to afford. Unfortunately, many people don’t realize just how important it is to have a good credit score in today’s society.
Life’s Necessities
The greatest disadvantage of having bad credit is perhaps the difficulties that one faces when trying to provide the simplest necessities for their families. Surprisingly, a person’s credit score holds greater merit than their yearly income, in a modern society that is practically built upon the concept of debt.
John may have an excellent credit score and a yearly salary of around $50,000, while Bob makes a yearly income of $70,000 yet has a poor credit score. In this example, even though John makes less, he would be able to drive a more expensive car, have a larger home, and his children would go to better colleges. In fact, John’s monthly bills would be less than Bob’s due to the fact that his interest rates would be lower and he would have a much higher credit limit.
Life’s Luxuries
Many people are disillusioned into believing that they can still live a luxurious life without a good credit score, simply by paying for everything in cash. While this dream may become a reality for a small percentage of consumers, in most cases it is simply not practical.
A rental property that costs $2000 per month would likely cost over $300,000 in most cases. A person with good credit would be able to live comfortable in such a home for only a few thousand dollars. In fact, the home could be furnished luxuriously and the entire moving expense would not exceed $15,000. However, a person with bad credit could not be approved to rent the home and instead would need to provide a hefty down payment, after which they would continue to pay a high monthly mortgage for years to come.
It is important to remember that even though the individual with bad credit may earn a higher salary, they will likely never be able to afford the luxuries enjoyed by a person of lesser wealth with a higher credit score.
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Tags: Credit, Good Credit
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