Your credit report and taxes

credit and taxes

Your credit score, credit report and taxes can affect many areas in your life such as your ability to take out loans, it can affect interest rates on credit cards, the house that you live in, and the car that you drive. There are other areas where your credit report and taxes are very important.

Your job

You may not realize it, but good credit is of vital importance if you want to keep your job. While a lot of people might not realize it, your credit score may have something to do with you getting or not getting a particular job. When you turn in your application and it has your social security number on it, chances are certain companies will likely run a credit report on you when they do a background check. They want to ensure that you’re paying your bills on time because this will let them know whether or not you’re going to be a reliable employee.

Where you live, what you drive and credit cards

Your credit report can also affect your ability to get a house or apartment, and also if you can get a car or truck, and credit cards. If you have really low credit, when your credit report is run, you will get really low credit limits with high interest rates. For example, if your credit score is in the 500 range or lower, this is considered poor credit and you will likely not receive a lot of credit card offers. Interest rate may be as high as 23 to 25 percent. What that means for you is that you have to pay more in interest in order to get the credit that you want.
You also may not be able to get a car or truck, and you may have to put a substantial amount of money down to secure credit. If your credit score is that low, you’re considered high risk. It can also affect your ability to get your first home. When you apply for a mortgage, you may find that you are required to put down 10 to 20 percent of the actual mortgage amount based on a poor credit score. When you have a low credit score, you are considered a very high risk and someone that banks don’t want to invest in.

The benefits of a good credit score

That’s why people have credit scores that are in the high 600 to 700 range and higher, are able to get more credit because they pay their bills on time every single month. They may even have high credit limits, but because they’re making payments every month and they’re meeting the minimum payments, their credit is higher.

Better mortgage terms and credit

That means for people with good credit, they can apply for a mortgage and actually put 5% down, or put down no money at all and have help with closing costs. Its also easier for someone with good credit to take out a loan for a car or truck, as well as to get credit cards with lower interest rates and added incentives.

Ways to help you keep a good credit report:

  • check your credit report regularly
  • look for errors and fix them
  • and pay your bills on time
  • lower your debts
  • and pay your taxes

Paying your taxes

If you haven’t been paying your bills or your taxes, tax liens can take more money out of your account and put you further in debt. That’s why you want to always ensure that as it relates to tax bills and tax liability, you make sure that you:

  • pay your taxes on time and you file them regularly
  • if you owe money to the government, you have to pay them
  • if you owe taxes, pay them. Don’t fall into debt with the IRS because any tax bill that you have will come out of your personl account and liens can be imposed

This can take away money from other bills that you may be paying. If you have a tax lien with the government, they can garnish your wages without your consent and take most of the money in your account along with any future refunds you might receive until your debt is settled. That’s why you have to ensure that you are responsible with your taxes, with all the payments, check your credit report and know your credit score.