Today in class, we discussed the significance of maintaining a good credit score, as well as the means by which to do so. It was interesting to note the correlation between monitoring an individuals credit and our current economic state. Mortgages were previously obtained under the assumption that applicants were honest about their salary. Of course, under many circumstances, they were being dishonest, and ultimately, they were unable to afford their mortgages. If something as simple as checking the credit reports of these individuals had been done, they would have been declined for the loan and the collapse may not have been so dramatic.
Aside from mortgages, you will require a solid credit score in order to get credit cards, get an auto loan, or even ensure that you can cosign a loan for your child’s education. One of the best things you can do for your credit is to monitor and track what it is that you owe, and pay it. This can range from utilities bills to the repayment of your auto loan. Keeping track of so many financial matters can be difficult, but there are valuable tools available to you to ensure that everything is conveniently located in one central location. In order to do so, I would recommend a valuable tool we discovered earlier this semester. The tool is called https://www.mint.com/. It will monitor all of your finances and allow you to establish an efficient budget to satisfy your repayment needs.
During to Real Estate bubble, many people did lie about their income but their credit was good at the time. So looking at their credit score, many companies did, would not have caught them. But the lenders needed loans to package and sell to overseas investors. So they did not want proof of income, they wanted those loans and did not care if they went bad.
ReplyDeleteThey didn't care if the loans went bad, because, once they were sold to outside investors, then the loans were no longer the bank's problem. Also, they knew that the loans were more than likely going to go bad because of the probable risk levels of these loans. They had to camouflage these higher risk loans by packaging them with much better loans so that the overall risk level of the bundle was lower.
DeleteI remember as a child the undecipherable mumbling of angry adults complaining about how irresponsible financial decisions could affect their credit score. The entire discussion was enlightening and made me truly think about my presence or lack there of in the credit world. The coup de grace of the conversation however was the striking implications credit score has on employment. I took a little extra time to research the topic and came across a great link that's below; that explains more in depth the marriage between credit score and the job market.
ReplyDeletehttp://www.creditcards.com/credit-card-news/bad-credit-employment-checks-1265.php
I think mint could really help me out with budgeting more effectively.
ReplyDelete