Why do we need to be reminded of the credit rating we have? What role does good credit play in our daily lives?

            These two are the nagging questions we gnaw at when matters of credit rating abound. Before get to answering them, the first thing we need to know is what a credit rating really is.

            Credit rating or scoring is a way of indicating whether we have good or bad credits. We score or rate credits as either good or bad in the micro level as well as the macro level. While the micro level of credit scoring or rating is entirely a personal process of knowing how our financial credits are, the macro level of determining a society’s credit rating or a corporation’s credit rating is entirely a different matter altogether. While a micro level credit scoring may be distinguished as a personal matter, the macro level credit rating is more technical and the methods used in this kind of credit scoring is more difficult to digest and oftentimes are kept by the credit rating companies themselves. Simply put, a lot of factors come up when we speak of identifying credit ratings in the macro-economics or business level.   

How de we know if our credits are good or bad? To roughly put it, we know we have good credits if we have made minimal to zero debts, we do not overspend, and we have more than enough finances we need to even come up with a savings account for other uses such as in cases of emergencies. Its either we rarely cross roads with debt or we don’t go making them at all.

Now, you may ask what the role of good credit ratings are in our daily lives. The thing is that having good credits is very important. That fact is something we cannot refute because we do experience the best of what it is like to have good credit ratings and we also go through financial hell when we accumulate bad credit ratings in whatever aspect of life we are in, the businesses, our financial relations with others and such.

Good credits matter. If you have good credit ratings, the more chances you have of getting really good financial deals. Example, let us say that you have one or two credit cards and you want to apply for another credit card account in another credit card company or bank, one of the things that a credit card company or a bank with credit card services look for is your credit rating history. If they find that you have maintained good credit ratings in the past up to the present such as you pay your monthly credit card bills on time, you have minimal to no debts at all, you are capable of paying another set of credit card bills in their company, then you may just get yourself another chance at opening a third credit account. If they find that it is beyond your financial capability to pay off another set of monthly credit balances, you may just get yourself refused by the company. That is just one of the many financial scenarios that a good credit rating or a bad credit rating can affect. There are many others.

 

So does a good or bad credit rating matter? One simple answer: Yes, it does.