As we are all well aware, there has been a global banking crisis.  Basically the banks have acted as if they can do whatever they want in order to make money and as a result they have made some very bad decisions.  One of the major mistakes they have made is to lend to people with bad credit.  These people then weren’t able to pay back the loan and as a result this kind of debt became “toxic.”

Of course, there are plenty more mistakes the banks made, the above is just one example.  Anyway, what’s done is done and now people with a poor credit rating are finding it much more difficult to get loans.  So now it’s very difficult to get an affordable poor credit rating home mortgage.

To introduce you to the world of credit scores, there are three different credit reporting agency lenders can access.  The big three are Equifax, Experian and TransUnion.  Then there is FICO who also provides a credit score and they estimate that just a difference of 100 points in your FICO score could potentially mean you will pay $40,000 more in terms of interest payments if you take out a $300,000 mortgage over 30 years.

So by now you should have at least one thought as to why it’s a good idea to have a good credit rating.  However there are actually some more reasons that you might not know about.

For instance, there are some employers who will look at your credit rating.  You might be shocked at this but basically a good credit rating suggests that if you are able to manage your own personal business, then you should be good at handling their business too.

Also, there are some insurance companies who take credit score into account when deciding upon the insurance rate to charge you.  Apparently, according to statistics, those with a bad credit rating are much more likely to make a claim than those with a good rating.

Keeping your credit rating in good shape doesn’t have to be difficult.  You just need to be very careful about how you use your money.  If you are constantly taking out loans and credit cards to buy items you want, it’s easy for this debt to mount up.  Eventually you are going to have problems keeping on top of things and this is when you will be late on your payments.