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  • Writer's pictureMoney Mentor

Do You Really Need To Fix Your Credit? 

You’re probably aware that you - and everyone else - has a credit score, and that credit score, whether it’s good or bad, is going to affect some elements of your life. And you’ll also be aware that a lot of the time you’re told you need to fix your credit, but that’s not an easy thing to do, and a lot of the time, it’s just going to be easier to leave it as it is and somehow manage with poor credit. After all, fixing your credit isn’t all that important, is it? 


Well, in reality that depends. It depends on what you might want to do in terms of your finances, and how you want to move forward in life. The fact is that for a lot of people, fixing their credit should be a priority, and with that in mind, here are some reasons why that is. 

Do You Really Need To Fix Your Credit? 

What Is Credit?

Before we start, just what is credit anyway? In essence, credit is the ability to borrow money (or sometimes get goods and services) without having to pay anything right now (apart from a deposit in some cases). Instead, the amount you owe will be split up into equal amounts and you’ll be pay it back over a set period of months, depending on what you choose - depending on what’s best for your finances. 


Your credit score is a figure that relates to how good you are at using credit wisely. If you’ve got too much (or, ironically, not enough) or you miss payments or you stop paying altogether, that’s going to affect your credit score negatively, but if you borrow and repay monthly without any issues, it’s going to have the opposite effect. Is it important though? 


Better Interest Rates

Good credit (and fixing your own credit score) can be important for a lot of reasons, but one that’s sure to be of interest is the fact that you’ll get better interest rates - the better your score, the better the interest rates in most cases. That means you’ll have lower monthly repayments to think about, and the entire thing, whether it’s a loan, mortgage, or credit card, will be more affordable. 


You can either pay the minimum due each month and be happy that you’re not paying as much as you might if you had bad credit, or you can pay more and reduce the debt earlier - the options are much more open when you’ve got good credit. 


Rent An Apartment 

Sadly, some landlords will want to know your credit score before they’ll rent an apartment (or house, come to that) to you. Even if you can definitely afford the monthly rent and the bills, and even if you can prove that through payslips, if you don’t have good credit, they’re going to be concerned about renting to you. 


As unfair as that might seem, landlords do have to protect their investment, and they do have to make money, and if that means only renting to people who can prove they’re good with finances, then that’s what they’ll do. So if you have good credit, you’ll find it easier to find a place to live. 


Lower Deposits

Some utilities and other items require a deposit or down payment first, and then you can put the rest on credit - think of a house, for example, or a car, or any larger purchase. We all know how hard it can be to save up for a deposit, so wouldn’t it be great if that down payment could be as low as possible? 


Yes, it would - as long as it didn’t impact your monthly repayments too much, of course, making an affordable loan unaffordable - and if you have good credit, you can generally get away with paying a lower deposit because the lenders know you’ll pay the rest without any problems. That can make buying something a much faster process, and ensure you can be settled in your home or with your new car sooner rather than later. 


Of course, saving up for any deposit is difficult, and if you want to buy a home faster even with bad credit, you’re in luck because there are specialist mortgages just right for you - mortgages for self employed with bad credit are a great example. Plus, getting a mortgage like this and showing you can manage your repayments is a great way to fix your credit, so don’t despair; anything is possible. 


Employment

The good news is that not all employers are going to need to see your credit score before they decide to offer you a job or not. In fact, in most cases, employers won’t even think about checking, and it’s not really anything to do with them anyway - you work, you get paid, and what you do with your money is your choice. However, in some cases, they will check, and a poor credit score could mean you don’t get the job.  


As we’ve said, it’s not the case in all careers, but if you want to work in a bank, in investments, in financial advice, or anything else to do with money, your employer may well want (or perhaps need if it’s a company policy) to check your credit score. They’ll have to know you’re good with your own finances before you can be in charge of other people’s, and if they can’t trust that you’ll be able to offer good advice or take care of finances, you might not get the job after all. 


The irony is that the job might help you get back on track with your finances, but nevertheless, if that’s how it works, you could miss out. 


Do You Really Need To Fix Your Credit? 

Do you really need to fix your credit? Yes and no. If you’ve got no need to borrow money and you don’t want a job in finance, you might not want to fix your credit if it’s low because it’s not causing you any problems. If, however, you do want those things, it’s well worth putting some measures in place, such as paying off your debt as quickly as you can and making sure you always pay on time - plus, check your credit report to ensure there aren’t any mistakes that could be affecting your credit. 


If you’re having trouble fixing your credit, it’s always wise to get some professional advice and to come up with a plan that’s going to help you, but don’t get stressed - it’s a potentially slow process, which is why options like mortgages for poor credit can be so useful. 



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