It is becoming clearer that the purchase of big-ticket items like autos and homes does substantial damage to one’s financial rating through the process of credit checks.
The San Francisco Chronicle today released an article that profiles the issue. Those, even with good credit, are experiencing credit score drops as they house hunt. Essentially, every time an individual or organization runs a credit check, it can cause a decrease in one’s credit score. Add up multiple applications for auto loans; bids on apartments, condos, and houses; and credit ratings can nosedive.
This is the pain experienced by those with stellar credit. What about individuals and families with debt and weaker credit scores? The nicks to the overall score can be just as severe as those on pristine credit ratings, but the resultant damage can be more difficult to overcome: see our past article on the top ten ways that credit scores can impact your ability to get out of debt. In short, those with debt problems might try and justify to themselves the purchase of a home to “get their foot back in the door” or a car “for work purposes”. But the reality is these purchases are best left to a future date after debt has been eliminated, even if the old jalopy clunks down the road or you’ll have to rent for the next couple of years.
Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
Tags: credit score damage, credit score drops, credit score impacts, credit score nicks
