Your credit score controls the obvious (things like mortgage eligibility) and the not so obvious (like whether you can upgrade your cable package.)
Tony Milburn is on the board for Catholic Charities Fort Worth and works in wealth management for UBS. He talks about the sometimes startling impact of poor credit.
Interview Highlights: Tony Milburn...
…on how poor credit can impact you unexpectedly: “I think that people expect their credit rating to impact their housing, I don’t think that they understand that sometimes it can impact where they work or if they can get a job or the interest rate they pay on credit cards.”
…on what happens when your credit score drops: “Most credit cards will do a search periodically, so even though you are making payments on one credit card and you think I’m very faithful with this but I’ll let my electric bill go or something else, it can still impact the credit card you have now because what happens is when they do these periodic checks on credit, if they see that you’re delinquent in other areas then they can raise rates for the card that you currently have.”
…on common missteps people take when trying to rebuild their credit score: “Most people believe that if they close a credit card account that that will improve their credit. So if they had two credit cards and let’s say each one has a $500 credit limit, once they had one paid off they would think if I simply close that account then my credit would automatically improve. In fact what happens if they close that account they’ve just increased their ratio of debt to potential credit lines, so that’s probably one of the big ‘gotchas.’”