How Can Personal Responsibility Affect Your Credit Record?

Your credit score is a key factor in matters that are totally unrelated to your ability to pay off a debt. A subpar credit score can keep you from landing a job, getting an apartment or obtaining a favorable auto insurance rate. It's no surprise that your credit score is such a big factor in these decisions — your credit score is the best tool a company has to assess your level of personal responsibility.

Timely Payments

The most critical factor in determining your credit score is your ability to make your monthly payments on time. If you're able to pay on time each month, it's an indicator that you're able to meet your financial obligations in a timely fashion. On the other hand, if you can't pay on time, it shows that you're either forgetful or unable to budget; in either case, it won't help your ability to land a job with any level of responsibility, and it sure won't help your credit score.

Level of Debt

A key to a good credit score is how well you manage the debt you have. Just because you have a lot of credit doesn't mean you have to use it, just as you don't have to take every vacation day in your time bank at work or spend your entire paycheck the moment it's received. If your credit card balances are close to your credit limits, it may lead prospective employers to think you're impulsive and careless with your money and, by extension, company resources.

Number of Accounts Open

Your total number of accounts is a factor in your credit score, but opening up multiple accounts in a short period of time shows that you're desperate for cash. It shows that you're not responsible enough to plan ahead and budget for the future. This has a negative impact on your credit score, and it may be looked on negatively by anyone assessing your level of responsibility via your credit report.

Failure to Comply With Agreements

If you're in a deep hole with your credit cards, you may be forced to turn to a debt settlement or even bankruptcy to get yourself back on your feet. While this alleviates your pressing financial burdens, you may end up destroying your credit in the process. Also, you may be showing that you're unable to carry out the terms you once agreed to. A landlord or employer is likely to see this as a red flag that you'll one day be unable to hold up your end of the bargain with them, which can result in them passing you over for an apartment or a job.

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