We all like to believe that the future is full of possibilities – after all, there’s nothing wrong with a little bit of optimism. But the hard truth is that you might be making mistakes today that will limit your options tomorrow.
For example, if you’re neglecting your credit, you’re likely putting up a roadblock to one of your major goals. Surprised? Take a look at the details below – it turns out that crummy credit could sideline at least three common aspirations:
Scoring a big promotion
If you have your sights set on climbing the professional ladder, you’re probably thinking more about your annual review than the contents of your credit report. As it turns out, you should be focusing on keeping both in good condition.
According to a 2012 survey by the Society for Human Resource Management, 47% of employers review the credit reports of potential new hires. This is usually done as part of the background check, and often comes right before an offer is made. But if your credit report contains negative information, such as a delinquency, foreclosure or bankruptcy, don’t expect the phone to ring anytime soon.
Many employers view a clean credit report as a sign of responsibility and trustworthiness. In fact, the survey found that the top reason employers conduct credit checks is to “decrease/prevent theft and embezzlement.” As a result, many are unwilling to hire a candidate who has a rocky history with handling borrowed money.
To prevent a shoddy credit report from dashing your chances of getting ahead professionally, be sure to avoid serious black marks like the ones listed above. Also remember that your employer can only look at your credit report, not your credit score, although it’s probably a good idea to work on keeping both in good shape.
Purchasing a home
Owning a home is traditionally considered an important step on the path to building long-term wealth. But before you can buy your home, you’ll need to qualify for a mortgage. And this is where your credit comes in – big time.
Aside from collecting information about your income and employment history, your prospective lender will also want to review your credit report and score as part of the home loan application process. Although every bank sets its own credit standards, most will only provide a conventional mortgage to people with scores of 620 or higher. If you want to get top-notch terms, your score will likely need to be in the mid-700s.
This means that if you don’t pay attention to your credit, you could end up getting shut out of homeownership. To make the American Dream your reality, make it a priority to pay your bills on time and keep the balances on your credit cards low. These are the two most powerful things you can do to build and maintain a good credit score.
You might be surprised to learn that your credit score could have an impact on your dating life, but the numbers don’t lie: According to a 2014 NerdWallet study, 53% of single adults are either “somewhat less likely” or “much less likely” to date someone with bad credit. If your goal is to make it to matrimony someday, you’re going to have to start by settling into a relationship. And without good credit, you could have a difficult time of it.
In addition to the tips mentioned above, there are other ways to prevent bad credit from getting in the way of romance:
- Start establishing credit as soon as you can. The easiest way to do this is by getting a credit card as a young adult and using it responsibly.
- Don’t apply for too many credit cards at once.
- Keep a mix of revolving and installment accounts on your credit report.
Let’s face it: Without good credit, your future doesn’t look as bright. Consider yourself warned, and use the information here to improve your credit today!
Sidelined image via Shutterstock.