The Risks of Refusing Credit

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(No Transcript)
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The Risks of Refusing Credit
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Have you ever found yourself in need of an
emergency loan, but been refused?

• If so, then you know how frustrating this can be.
  If not, maybe youre lucky enough to have never
  been refused credit, but maybe that just means
  that you havent needed it before! Regardless of
  your situation, whether or not youve been
  refused credit, there are some important things
  to know about this situation and how to handle
  it. These things will help you understand why
  your credit has been refused, how to prevent it
  from happening again, and what steps to take if
  this becomes a recurring problem.

1. Credit Impacts Employment
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2. Get a Free Credit Report

• Relying too heavily on cash can be risky when it
  comes to your career. If youre looking for a new
  job, turning down credit could put you at a
  disadvantageespecially if most of your job
  opportunities are for positions that require
  credit. Employers often use credit reports as
  part of their background checks to determine
  whether an applicant is responsible enough to
  hold a position with them. In these cases,
  refusing credit may affect more than just your
  short-term budgeting it may have longer-term
  implications for your employment status.

If youre rejected for credit, check your credit
report to make sure there arent any errors. Its
also a good idea to monitor your report
regularly, as it can be used to determine your
eligibility for new lines of credit and other
services. If you see something on your report
that isnt accurate, contact one of these three
major credit bureausEquifax, Experian, or
TransUnionto work with their dispute process.
(You may want to do so even if you dont think an
error is present.) And if you find yourself in a
situation where your request for new credit is
repeatedly refused, ask why maybe theres
another option you should consider.
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3. Keep an Eye on Your Credit Report

• When you apply for credit, be it in person or
  online, your credit report is checked to decide
  whether or not youre a reliable borrower. Thats
  because creditors will base their decision on how
  youve handled previous lines of credit. Checking
  your credit report annually means that any
  discrepanciessuch as inaccurate informationcan
  be corrected before they impact your ability to
  borrow money. And remember, if you ever suspect
  someone else has tampered with your personal
  information (such as by opening accounts under
  your name), then contact both credit bureaus
  immediately identity theft is never something to
  ignore.

4. Why Inquiries Matter
you ask a bank or lender to review your credit
report and scores. This will lower your score by
a few points. However, an inquiry remains on your
report for two years so multiple inquiries in
that time can result in lower scores and make it
more difficult to receive approved offers.
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• Furthermore, each time you request information
  about a loan or line of credit your score can
  drop. For example, you may have a valid need to
  check your credit reports if
• Youre applying for new lines of credit such as
  getting new credit cards or taking out loans to
  purchase assets (property, etc.). The number of
  times your social security number is run by banks
  and lenders determines how many times there are
  inquiries on your report. This can lower your
  score significantly.
• You have been a victim of identity theft or had
  accounts opened in your name without permission.
  In either case, you will likely want to check
  with each bureau every 90 days to ensure that all
  inquiries are accurate and no others have been
  made in error.
• Also, keep in mind that refusing credit doesnt
  guarantee you wont receive an inquiry when you
  apply for an account later on.

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5. Pay Off Your Balances in Full
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6. Do Not Close Old Accounts

• If you do have a good credit score, but youre
  only making minimum payments on your credit cards
  each month, it can take years to pay off your
  balance. Instead, commit to paying off your
  balances in full each month. The sooner you pay
  off your debt, the sooner you can start saving
  money instead of spending it on interest fees!
  You may even want to apply for a balance transfer
  card if you think that carrying high-interest
  debt is dragging down your ability to save look
  for one with an introductory 0 APR period.

If you think having a lot of old accounts will
put you at risk for identity theft, think again.
When your credit score is calculated, it looks
only at active lines and recent activity. An open
account that hasnt been used in years wont make
a big difference to your score. Closing an old
account could do more harm than good by lowering
your average age. And if you close your oldest
account because it has a balance with an
outstanding bill, dont worry Your payment
history is always reported regardless of whether
or not there are balances on all cards.
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7. Avoid Speeding Tickets and DUIs

• Also know that when opening new accounts,
  companies want to see a solid mix of old and
  newso keeping just one card may not be enough to
  convince them to approve you for another line.

Your credit score is used by several different
industries to determine your creditworthiness.
Those who have low scores tend to pay more for
insurance, are less likely to get approved for a
mortgage, and may not be given loan options in
foreign countries. One such industry that relies
on credit history is law enforcement. When youre
pulled over for a traffic violation, an officer
will run your license plate through his or her
database to check whether you have any
outstanding warrants or unpaid tickets.
8. Be Cautious When It Comes to Cell Phone
Insurance Plans
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9. Consider All of the Costs

• Before you sign up for a cell phone insurance
  plan, understand that you are paying an average
  of 1.50 in premiums every month to protect an
  investment that, if broken or stolen, can be
  replaced for as little as 100. The cost also
  depends on your carrier and how much it would
  cost to replace your device if damaged. Many
  carriers offer protection plans at discounted
  rates instead of going through a third-party
  provider, so consider those options first before
  choosing a third-party provider.

You dont want to get into credit card debt, and
thats understandable. But refusing credit
altogether is not always a good idea. Often,
people end up paying much more for things they
need if they wait until payday or until they have
saved enough money to buy them outright. For
example, say you need a new bike with your cash
in hand, you visit your local shop and negotiate
a good price on one that fits your budget
perfectly.
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10. Don't Check Into Rehab Unless Necessary!

• People who are addicted to drugs and alcohol, or
  who have medical conditions requiring regular
  treatment with drugs such as painkillers, often
  need to be able to manage these issues while
  maintaining a job. For many people in these
  situations, going into rehab can be just what
  they need to begin living a normal life. However,
  many people would benefit more from simply
  refraining from using addictive substances and
  seeing a physician regularly than they would from
  being locked away in an expensive rehabilitation
  facility.
• If you think that you might need help with
  substance abuse, but you arent sure whether your
  situation is severe enough to necessitate
  treatment at a rehabilitation center, you must
  seek help from professionals an addiction
  specialist will be able to evaluate your
  situation and help determine whether rehab is
  appropriate for your needs.

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