36% Say Low Credit Scores Are Acceptable!
For many years, America has been struggling with a troubled economy and it seems that this constant uphill battle has influenced the attitudes of millions of people when considering credit scores. The average credit score in the US is 736 and due to a good credit score rating being anything over 720, this seems relatively acceptable. Despite this, it is the approach most Americans have towards credit ratings that is most distressing, as set out by JZ Analytics, who have recently conducted a poll displayed on the credit.com website. Due to the results of this poll indicating that more than 77 million people throughout the United States assume that a low credit score is tolerable, it is clear that mental outlooks need to change as a way of avoiding financial pitfalls.
Good vs. Bad Credit Scores
Credit scoring systems differ greatly but typically, a score that exceeds 720 will be deemed as good. If a credit score is 740 or higher, this will be an excellent rating and will enable you to apply for the best loans with the best interest rates. Should your credit score decline to 680 or as low as 620, a loan application may be secured but interest rates may heighten. A poor credit score will generally be between 520 and 619 and in the event that financial history has resulted in a score of 559 or less, it is highly doubtful that a lender will consider you for any form of credit. However, it seems that having a bad credit score does not affect 28 million Americans, who admit that they would purposely disregard mortgage payment and other bills.
Some other overwhelming statistics from the JZ Analytics poll include:
- 32 percent of people believe that mortgage defaults can be achieved without facing serious consequences.
- 36 million American residents know someone who has deliberately lapsed on mortgage payments.
- 17 percent of American’s polled would lie about their financial situation in order to be approved for credit.
- 75 million people in America, or 35 percent of poll participants, feel more apprehensive about identity theft in 2012 than they did in 2007.
How is Credit Rating Affected?
There are multiple ways in which credit ratings can be negatively affected and paying late is at the top of the list. Although paying bills outside of the required time limit is a sure fire way to hurt your credit score, it seems that consumers have a complaisant perspective toward their credit rating based on the JZ Analytics poll. While 75 million American’s feel intimidated by fraudsters, 77 million people think that maintaining a bad credit score is standard, but what is most surprising is that identity theft and fraud can affect credit score significantly.
Lexington Law says that avoiding payments completely will highlight you as being unreliable and this can result in accounts being shut down. When accounts are charged off or sent to collection agencies, a collection status will show up on your credit history and this tells future lenders that you were unable to repay funds within the desired time. Getting a judgment or having your home foreclosed will also be illustrated on your credit history and this could potentially impact your ability to gain employment in the future.
Additional things that can disturb a credit score will be:
- Defaulting on a loan
- Filing for bankruptcy
- Over-the-limit credit card balances
- Closing credit cards with outstanding balances
- Numerous loan and credit card applications
- Having only one type of credit account.
Side Effects of a Poor Credit Score
If you are one of the 28 million American’s who would default intentionally on payments, you should really open your eyes to the ways that a poor credit score can alter your life. When applying for credit or a loan with a bad credit score, you will be seen as a high risk and because of this; you will be faced with extortionate interest rates. If you do not have to deal with high interest rates, there is a major possibility that your credit application may not be approved in the first place. If you are preparing to move into a new apartment it is imperative to be aware of the fact that bad credit scores will alarm the landlord, who may not acknowledge you as a future tenant.
Opportunities for employment and cell phone contracts will also be tarnished if you have a low credit score and because insurance premiums will be higher, affording daily costs can fast become oppressive. Furthermore, you should brace yourself for calls from debt collectors, troubles when funding a new business and dilemmas when attempting to purchase a car. These scary facts prove that although a large portion of American’s are becoming relaxed in regards to their credit score, there really is no reason not to try and improve yours.
This article was written by author and blogger Chase Sagum. Chase covers Financial and Economic topics from a political perspective around the web.