HOW IT CAN MAKE OR BREAK YOUR LIFE
By Shafiq Jasar
Everyone needs to understand the Credit Game. Before the massive information control even existed, financial institutions had wide net over our lives: how much money we made, how much we spent, how we spent it and so on. Banks, through their credit card and other system, were aware of what we were buying and where. They knew our shopping patterns and purchasing preferences.
Based on that information they could create a pretty good picture of who we were.
The banks and other lending institutions have created a very efficient control system through which they would train people as well behaved and obedient customers. These institutions would report our purchasing and borrowing behavior to the credit bureaus so they could keep an eye on us whether we behaved as expected of us or whether we did not fulfill our obligations and were late with our payments.
This system has been continuously perfected through decades especially since the introduction of the internet. In fact it is most likely that the credit model perhaps laid down the foundation for the ever increasing surveillance and interference in our lives coming from both governments and big businesses.
WHY SHOULD YOU WATCH YOUR CREDIT RATING?
This is how it works:
Your credit is checked every time you need financing to:
- Buy your new or used car
- Buy a new appliance (s)
- Purchase a home
- Refinance your mortgage
- Buy a smart phone
- Buy a tablet/laptop
Also, quite often, service companies such as telephone and internet providers, gas and hydro companies, insurance companies and even your new landlord, check your credit. Based on your credit report they make their decision whether to trust you or not.
These are just a few examples of how lenders make their decisions. In, short, every small or big amount of borrowing is almost always guaranteed to be reported to the credit bureaus. Most importantly, before you are even considered “worthy of lending” money to, your credit scores or rating is requested from the credit bureaus. That means whether you get the requested loan or not the seller/lender will have one or more hits on your credit rating.
Why Are these Hits Bad for You?
Every hit on your account is bad for you because each hit reduces your scores (credit points). The more hits on your account the lower your credit scores. This is in addition to your other borrowing and paying behavioral patterns.
In the next article we will discuss how to avoid these hits and how to take advantage of a good credit for personal and business purposes.