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Why Financial Responsibility is Important

In today's modern world and ever-growing global economy, it's significant to take into consideration the value of remaining on top of your financial responsibilities.

Whether or not you maintain and take seriously financial elements to your overall dynamic of credibility is essential, and can easily mean the difference between purchasing that used or new car you're interested in, mortgaging a house, and even being at a disadvantage for employment opportunities. How is this possible you ask? Believe it or not, some employers - such as working in a bank - will require a financial report, especially when it's dealing directly with, or around money - especially when there's large amounts involved. Credit and financial credibility literally define your eligibility for many milestones in life, outline the likelihood of personal and financial independence - and success!

What is the purpose of a Credit Score?

A credit score is typically accumulated overtime, however, the average individual 'starts with' around 400-500 at the age of 18, with 300 being the lowest and 850 being the highest.

How your credit is impacted by financial decisions and responsibilities is an integral concept to better managing your life and finances. A few examples of financial responsibilities that directly impact your credit score are:

  • Car Loan or Leases
  • House Mortgage or Loan
  • School Loans, Repayment History, and Amounts
  • Credit Card History, Payments, and Current Salary

  • An interesting fact, which is quite significant and a lot of people don't realize it; is that there's actually 3 major credit reporting agencies (on a state level), these three are Equifax, Experience, and Transunion. To add to complexity, these scores are obtained through different sources or measures - and at times will reflect different scores than one another.

    Therefore, before you go diving into a free Credit Score report system and getting yourself tangled up in a 'mess', take into consideration the differences and monetary or fiscal value of 'soft' and 'hard' credit report 'hits'. That is, outside the annual limit, an individual is indeed 'penalized' for inquiring about his or her credit score more than once. Why you ask? Well, for starters, this is a common system most typically used by lenders, so even though you personally are not, it's important to accept that this system was primarily designed for such.

    Each credit report 'request' (known as a query) is going to considerably have some level of 'negative' impact or deduction of your credit score. That is, as such a behavior is equated to the similar instance in which a bank or other lender for example has inquired about your eligibility and current credit score in lieu of considering you for a loan or 'line of credit'.

    Putting all of this information together, this means that the more 'credit hits' you acquire, the lower your score will become. No lender, within reason of logic, will want to consider someone for a loan at an optimal standpoint if this individual is for some odd reason continuously requesting loan consideration from a multitude of lenders or banks in the forms of car loans, personal loans, etc. In fact, in a way it makes the individual look 'desperate' or unreliable, unstable, or questionable in terms of intentions and reliability to repay the debt. Although your salary plays a heavy role throughout credit reporting (ability to repay) and loan decision-making, likewise does your credit report history based on previous loans to payment history.

    A credit score, credit-card, or small personal loan (even student loan) is a very ideal 'starting point' for an individual to begin accumulating good credit, paying on time, and setting themselves up for success for the long-term when the time arises that you wish to finance something much larger or greater than just a car or $3,000 line of credit - for example, a $250,000.00 house.

    Responsible spending is responsible researching. Always do your due diligence to ensure the stability and protection of your financial security and future!
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