How Credit Impacts Your Life & What You Can Do About It

How Credit Impacts Your Life & What You Can Do About It, credit importance and credit improvement tips, facts about rebuilding and restoring credit score, understanding your credit report, #creditscore, #creditrepair, #creditimpact, #financialfreedom, #frugalliving, #personalfinance, #moneystuff

This post is in partnership with Lexington Law, thank you for supporting brands who support TCM. As always, all thoughts, opinions, experience, and advice is my own.

Happy New Year! I'm guessing at least a few of you decided to make some “financial resolutions” this year, amiright?! ??‍♀️??‍♀️??‍♀️ Today I wanted to take some time to help you kick off the year with a bang on those financial #goals by sharing some ways credit impacts your life to serve as motivation for staying on track with those goals! Beyond getting you motivated, I'm also sharing some knowledge and resources that can show you how to decrease the impact credit will have on your life this year so you can start using it as a tool.

Motivation: How will credit impact your life?

A quick recap before I go any further in this post: your credit score tells potential lenders and others how “trustworthy” you are essentially. It's how they determine the likelihood you'll actually pay them back or follow through with a payment. For a more in-depth break-down of your credit score, check out this post.

Higher interest rates

Let's start with the most obvious: a lower credit score means higher interest rates. That applies to your credit card, mortgage, and other loans. In order to cover their risk, lenders and creditors will give you a higher interest rate, ensuring they are covering some of their liability. The more money you borrow, the more money you'll ultimately have to pay the creditor/lender as a result of your high interest rate. Whereas someone with an excellent credit score will still have an interest rate in those situations, it'll just be lower, meaning they'll ultimately pay less.

Higher prices

Nope, not talking about it costing you more because of interest rates – I'm talking about the fact people may charge you more when looking at your credit score because you seem untrustworthy with money. Seriously, you could pay more on your cell phone, insurance, utility bills, furniture, and so much more simply because you have a low credit score.

[RELATED] 8 Ways To Stop Feeling Broke

Higher insurance premiums

Are we starting to see a trend here? It's believed that lower credit scores are often associated with higher insurance claims filed. Thus, insurance companies can check your credit and choose to charge you a higher premium in order to mitigate their risk.

You may not get the home you really want

This rental and home buying market is insane right now. So it's no surprise that things are super competitive; but even if they weren't super competitive your credit score can make or break your chances of getting that new place you really want. Next to your rent-to-income ratio your credit score is typically the most important factor potential landlords are going to look at.

Just think about it: first they want to make sure you have the money to pay for rent (rent-to-income ratio), and then they want to check your track record of actually following through on payments (credit history/score). It's one of the only concrete things they have to decide if you're trustworthy or not.

If you're in the home buying market, your credit score impacts the interest rate you'll get on your mortgage. Simply put: the lower your credit score, the higher interest rate your mortgage company will charge you. Some people even argue that a low credit score is actually a sign you shouldn't buy a home at that time even if you can get a mortgage.

Increased rejections on your credit and loan applications especially when it comes to rewards and perks

We all know using money and credit wisely can lead to some great perks and rewards. However to get access to rewards cards and those perks, you usually need to meet a minimum threshold when it comes to your credit score. If you submit applications for credit or loan approval you may be denied, and worse those applications act as hard inquiries, meaning they'll drop your score even more in the process.

You may not get that job you want

Employers can run a credit report on potential employees in most states. They aren't so much looking at your credit score in this situation – but more so looking for red flags that could impact your job performance. So derogatory marks, high debts, bankruptcy, outstanding bills can all hold you back from your dream job if you don't take care of them. If you don't know how to take care of them, call Lexington Law Firm for your free credit repair consultation.

Or be able to start your own business

If you're starting a new business that requires you to take out a loan (which most startups need a little bit of funding to get off the ground), you may not get the full loan you're looking for – or even get approved at all. Even if you go into the bank fully prepped with your business plan, data, market research, and letters of intent from new potential customers, a bank may still choose to deny you or give you ridiculous terms for only a portion of the money you were seeking.

[RELATED] How To Prepare Your Household Budget When Transitioning To Becoming An Entrepreneur

Your relationships

It's no secret that finances can often put a strain on a relationship. It's important to know how to talk with your significant other about money, and also to take care of your financial situation to avoid unnecessary tension and fights that can lead to breakups or divorce.

[RELATED] How To Talk About Finances With Your Significant Other

Resources: Enlisting professional help with Lexington Law Firm

Reading all the blog posts, articles, and books is a great first step. But if you're really serious about making large strides on your financial journey you should consider enlisting professional help from Lexington Law Firm. They can help you make progress on improving your credit score so you aren't denied that dream apartment or paying more money in the long run just because of a low score. They also assist in removing damaging items from your credit report which, again, can be really helpful in helping you land that dream job, especially if you work in upper management or finance where those negative marks could be seen as a direct indicator of how well you'll be able to do your job.

Lexington Law Firm has a slew of other resources available to you like the Lex OnTrack Identity Theft Protection tool which monitors your identity and protects you from identity theft with $1 million in identity theft insurances. You can learn more about how the process of working with them works here.

Knowledge: Where can you learn more about your finances and credit?

You can also learn more about your credit score, history, and making better financial choices in these articles:

Battle of the cards: Credit vs Debit vs Prepaid vs Secured [Which Is Right For You!]

How To Improve your Credit Score this Year

Millennials, This Is How To Start Repairing Your Credit

How To Do A No-Spend Challenge [+ Why You Need One ASAP]

10 Money Myths You Need To Forget ASAP

How To *Actually* Budget Using The 50/20/30 Guideline

Can Student Loans Actually Be Forgiven? [+ 10 More Student Loan Questions Answered]

How To Repay Debt [2 Strategies To Change The Game]

Action steps to reach your financial goals:

Find out your credit score

Visit to find out your credit score for free. This is great to record now so you can see your progress throughout the year. It'll also be a great motivating factor if you start to lose sight of how far you're coming along your financial journey. Because LBH, motivation has a half-life and sometimes you're really going to want to just say, “screw it” and buy that item you've been eyeing for a while. But trust me, your financial freedom will feel better than any quick fix item you bring into your life. So when you get that urge, check out your current score and compare it to where you were at when you started this journey.

Once you've pulled up your score, come back on 1/16/19 to learn about all the habits of people with 800+ credit scores and see how you compare!


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