How Financial Products can Impact your Financial Health

Good health is something everyone wishes for themselves and their families and to some extent this can be influenced by eating healthy foods and keeping fit. Those who have financial problems will find it can impact on their health due to stress and worry. Anyone who is controlled by their finances instead of being in control of them is not in good financial health, but can reverse the situation over time. There is no bigger indicator of your financial health than the pervasive Fico credit score: it may be the last thing on your mind when there are real monetary problems but it indicates your responsibility to others.

Financial problems come in many forms from being unprepared to meet future commitments to being mired in debt to such an extent that you lose your home. Living on credit can become a huge problem if the debt runs out of control and you spend all your time working to service it and never have the opportunity to put funds aside for even an emergency fund. People happily run up debt having no idea of the consequences if their circumstances change, whilst others borrow far in excess of what they can ever be reasonably affordable to them.

Mortgage problems and foreclosures have hit the people hardest who were not prepared financially for home ownership in the first place. Buying more house than they could afford at over inflated prices was negative equity waiting to happen, when insufficient down payments were made. Those with a foreclosure marked on their credit reports are unlikely to be considered again within the next few years for a further mortgage so are consigned to renting and paying their landlords mortgage instead of their own.

Every day students are taking on irresponsible levels of student loan debt. For some it will be a wise move as will enable them to receive a professional qualification and a good job. However many are building up future problems for themselves which will impact their financial health for years to come as they will burdened with debt they will be ill prepared to service.

Unfortunately a lot of people who are totally responsible with their own finances and have no financial problems can make a rash decision which will impact on their future financial health. Those who are persuaded to become co-signers for friends or relatives needing a loan will find that in approximately 80% of cases they will become responsible for the debt.

If the person they stood guarantor for let’s them down and ceases to make payments in compliance with the terms of the loan or credit card problems will arise. It will have a negative impact on the guarantors own credit score as well as leading to financial problems in many cases, as they were unprepared to take on the debt they co-signed for.

Financial problems show up a person’s credit report. Low credit scores have a significant impact on a person’s life as they will pay higher interest rates for borrowing and will most likely need to rely on sub prime lenders for future finance. As many have discovered already a poor credit report has cost them a job.

As people deal with their financial problems and try to get back on track, they need to work to re establish a solid credit history. There is no easy answer or quick fix and financial health is reflected in those three important digits which equate to the credit score.