When you start your first job, there is a lot to consider, from how to perform successfully in a new and unfamiliar workplace to the intricacy of the task you’ll be allocated.
Unsurprisingly, your credit score could be the last thing on your mind.
By the time your pay arrives in your bank account, you’re probably more concerned with paying the rent, buying some new clothing, celebrating making it through the month, or figuring out when you can purchase a car.
Neven Narayanasamy of DirectAxis, a speciality loan provider, stated that what you do with your first salary deposit is critical, since the spending habits you acquire early on might have long-term consequences for your financial future.
“Usually your financial track-record begins when you start earning a regular income. This will open doors to financial products including credit cards, retail accounts and loans. How you choose to use and repay these as well as meet your other financial obligations such as rent, or a cell phone contract, will determine your credit score,” said Narayanasamy.
He added that it is one of the most important pieces of financial information about you.
Your credit influences whether individuals or businesses are willing to conduct business with you. Even possible future employers might want to examine your credit report.
Aside from the obvious advantages of being able to apply for loans, vehicle financing, and other credit facilities, having a good credit score can also help you to acquire better interest rates since you are perceived to be a smaller risk than persons with lower scores.
By law, you are entitled to one free credit score report each year from any of the credit bureaus. According to Narayanasamy, most individuals are unaware of their rights or where to apply, thus they never check their scores.
“Having an understanding about what affects your credit score and the implications of this, such as access to financial services or better interest rates gives you some control over your financial future.
“It also makes you less susceptible to believing conspiracies such as blacklisting. People don’t get ‘blacklisted’, rather low credit scores prevent them from qualifying for certain products and services.”
Narayanasamy concluded that before you spend your first salary, take time to learn about your credit score and how maintaining a good financial track record might help you in the future.
IOL Business