Three Reasons to Clean Up Your Problem Credit Now

With the current financial crisis blanketing the United States, many people are wisely trimming down their spending and holding off on unnecessary purchases. If you’re one of the millions of people looking more closely at your bottom line and you also have problem credit, you may wonder if credit repair services are worth your hard-earned dollar. While everyone’s situation is unique, there are three good reasons that you might want to consider credit repair a necessary expense rather than a costly luxury.

Reason Number One: You are Moving or Plan to Move in the Near Future

If you’re planning on moving into a new apartment, problem credit can often cause unforeseen difficulties and increased expenses. Most apartment managers now run credit reports when you fill out an application for a new apartment. This can mean that you’ll be turned down for rent in more reputable apartment complexes, leaving your options for suitable living arrangements limited at best. If you are accepted into the apartment complex, be prepared to pay a higher deposit than most renters – and you may or may not get your deposit returned at the end of the lease period, depending on the terms.

Poor credit scores can also cause difficulties with your utilities. Electric companies, gas companies and phone companies almost always check your credit history, and a poor credit score can mean deposits upwards of $200 or more. This can quickly add up to an unaffordable expense if you’re trying to move for financial or budgetary reasons. If you don’t have the cash on hand to pay the exorbitant amount charged for deposits and connection fees, you may find you can’t afford to move at all, since utilities are a large part of what makes any residence livable. And if you do manage to pay the deposits, don’t expect a refund; some companies will apply the deposit to your balance after several months of payment. Others will hold the deposit as security against your final bill. But rarely will a utility company issue a refund check for a deposit, unless you are turning off the service and have a positive balance.

Reason Number Two: You Plan to Look for a New Job

Unemployment is at an all-time high, and new jobs with decent benefits are becoming more scarce throughout the country. If you are one of the many recently unemployed due to company layoffs and closings, a poor credit score may put you at the bottom of the pile when it comes to job applicants.

More and more, employers are looking at the credit of potential employees when making hiring decisions. Poor credit may put you out of the running for a new job, even if you are highly qualified in other ways. Of particular concern, if you work in management or finance, a poor credit score may be seen as a direct reflection of how well you would manage company funds.

If your current position requires a security clearance, you may find yourself suddenly out of job if your credit scores fall too low and you are classed as a security risk.

Job seekers can give themselves an extra advantage with a clean credit history and strong credit score. Whether accurate or not, your credit history is seen as a gauge of how trustworthy, responsible, and reliable you will be in your new position. If you take the time to clean up your credit score before you start your job search, you may find more opportunities for employment.

Reason Number Three: You Plan to Buy a House/Refinance Your Mortgage

While the banks are not doling out home loans at the levels seen earlier in the year, home buying could prove an attractive option for those who could not afford home prices seen just a few months ago. With the housing markets weakening, many first-time buyers could be in for an attractive first mortgage if they have good credit scores. Interest rates are low, and with foreclosures on the rise, a couple with an average income for their area may be able to afford a larger or nicer home than they would have when the housing market was booming.

If you’re currently a homeowner and thinking of refinancing, having a good credit score can see your mortgage payments drop dramatically, saving you thousands of dollars over the life of the loan. While not everyone can qualify for refinancing, having a good credit score means that you’ll have more options than most people who are looking to downsize their mortgage payments in the long-term.

Those who have problem credit are not likely to find a home loan available for any price in the current market. With so many lending companies burned with the so-called ’sub-prime’ lending spree, the market for loans available to buyers with less than perfect credit has diminished dramatically. So even if you have the income for a new home, a poor credit history may prove to be an insurmountable barrier to the American dream.

There are many reasons to consider credit repair as a solution to your current credit score problems, but if you fall into one of the above categories, you may want to take a closer look at procuring credit repair sooner, rather than later. With the amount of money you save in reduced deposits, increased job security, and lower interest rates, the amount you spend on credit repair services will be a drop in the bucket, comparatively.