When the Collateralized Debt Obligation (CDO) Crisis caused such problems to Wall Street and beyond, the days of easy credit and complacency came shuddering to a halt. The traditional financial institutions had always been fairly conservative and put great store on an applicant’s credit history, the basis for the score that often determined an applicant’s ability to borrow money.
Within months as businesses struggled and unemployment rose there were many more people with a poor credit score as they became increasingly unable to meet their financial commitments. Things would have been even bleaker if these institutions were the only ones listening to loan applications. They were listening but mostly rejecting all but the very best applications.
It still makes sense to have a good credit score. It is something that can even be taken into account when someone is applying for a job; it is seen as indicative of self-discipline and organization. If you are unconcerned about your credit score you should consider a number of aspects of your life where it may have an influence
Companies marketed their cards aggressively prior to the recession. Many people had multiple cards and juggled their debt using 0% balance transfer offers. Few people were not offered an increase in their credit limit if they were approaching their current one. As long as they were paying the minimum monthly payment no one seemed to worry. The difference today is that the credit card companies are far more circumspect. Cards are so convenient if used in a disciplined way and if you want that convenience, your credit score is still likely to be a determining factor of what you can get both in the interest you will be charged and the limit that will be set on a card.
If you are looking to buy an automobile on finance, the dealer is likely to have finance available when you sit down to do the deal. Your credit score will be one of the elements that will come into the equation with such financial agreements.
The real estate market certainly took a hit when the recession came. It is functioning again and is dependent upon mortgages. Buyers may need a bigger deposit than they needed a few years ago so lenders are reducing their exposure. That said lenders still want to avoid the toxic debt that was widespread and largely hidden in those CDOs. A loan and the interest rate applicable will take your credit score into account.
If you are typical of most people you will be looking for credit a number of times during your life whether as a student, to buy your home and automobile or simply to get a personal loan for a variety of things. The better your credit score the less interest you are likely to pay over the years.
It means that if you have been a victim of the recession and your credit history has a few blemishes as a result you should try your best to repair the damage. You do not need the traditional financial institutions in any way. There are modern online lenders who are far more concerned about your current circumstances and apparent ability to repay any borrowings in the future. That means your having regular income and proving it in your loan applications. Although you may pay a point or two above the most competitive interest rate you will receive financial help when you need it. As you begin to pay the installments successfully you will get some positive entries in your credit history at the same time as old blemishes carry far less weight.
It will not happen overnight but your credit history will improve. You can expect that in future you will receive better rates when you are looking for loans of any kind. It is unlikely that there will be such a devastating recession in the years to come. That does not mean you can be complacent about your financial situation because there is always some financial situation to address even if it is retirement or an emergency fund. It is worth doing your best to have a good credit score to help you along the way.