A Little Mistake That Hurt My Credit Score and Cost Me $2,000 A Year

For teacher candidates, maintaining a good credit report is difficult. It is a transitional period when often going to college and barely having enough money just to get by can ruin your credit report. Once you land a teaching job, it is much easier to repair your credit score. But really, how important is your credit report?

There are a lot of people who do not think of their credit rating as something too important to them. There are others who, while acknowledging its importance, would not be overly concerned about the issue as they do not understand the reasons for its importance. Well, to those people, they should at least be aware of some of the uses that are made of credit reports.

While it may seem obvious to state it, credit reports are mainly concerned with assessing the risk involved in loaning money to you. Lenders are concerned with one thing only, getting repaid, and their entire industry revolves around making this happen. Therefore, they have developed the credit score that will assess your likely hood of repaying them and this is then used to either approve or reject your application for credit. While this is the basic purpose, some lenders want to gain market share against their competitors and so to do this they will lend to higher risk borrowers. These lenders create different categories of loans which people with lower credit scores can qualify for. These loans always have higher interest rates and other less favorable terms and conditions and this will be the price you pay for having a lower credit rating.

I must admit, I made a mistake when I let my credit score slip when I started paying back my student loan and my daughter had some emergency medical work done on her teeth. Today, the only offers I get are for credit cards with outrageous 24% annual interest rates. I tried to qualify for a 10% annual interest rate card and was turned down. I kept telling the credit card company that because my credit score was bad, that was all the more reason why I needed their 10% annual interest rate card. They didn’t care. All they cared about was the risk level associated with my name and if they couldn’t loan me money at a 24% annual interest rate, then they didn’t want to loan me money at all. I calculated that I pay about $2,000 per year in interest rate charges on my three credit cards that I wouldn’t have to if I had a better credit score and could qualify for a 10% annual interest rate card.

Since loans are used to finance homes, education, cars, and most other large purchases in life, the inability to get access to credit, or only to be able to get it at less attractive terms and rates, is a substantial reason to care about your credit report and try to keep it in as good a