by Joseph Kenny | 11/27/09

There is so much to worry about right now that your credit score could be the last thing on your mind. You have to spend your time figuring out how to make it through each month or even each week so although you want to maintain a good credit score, it may not seem like a big priority.

Still, it should be. Recession or not, your credit score is going to impact your life. In some ways, your credit score may be more important than ever.

The Facts About A Recession

They don't call it a recession for nothing. These are hard times and your finances are reflecting this painful fact. You need credit now more than ever, but your credit score could be standing in your way.

You could be trying to get a car loan, a home loan, or a contract for a new cell phone. All these situations could be affected by your credit score. In fact, lending institutions and other businesses that use credit scores as evaluation tools are setting the bar much higher whenever you seek out credit in any form. Your credit score is crucial because you have to keep it as high as possible to have a chance at obtaining credit and at not having to overpay for the credit that you do manage to get your hands on.

Why Do Credit Scores Drop?

Now is the perfect time for a basic refresher course in how credit scores are determined. While multiple factors go into determining your credit score, the one that is most likely to be taking a hit right now is the one that drops your credit score for not paying your bills on time. Combine this with the fact that many people are carrying higher account balances to cover the basic expenses of life and you realize how easy it is for scores to plummet.

Unfortunately, you do not even have to fall behind in your payments to experience a lowered credit score. Many credit card companies are reducing credit limits to shield themselves from risk. The less available credit you have versus the higher account balances you are carrying can lower your credit score without a single misstep from you. In fact, you may not be able to gain access to new credit accounts because of issues with your current ones. If you are having a hard time, it could be harder to get out of it as a result.

What You Can Do

You always need to be aware of your credit score, but it is even more important in this day and age. Use your free credit reports to keep updated on your credit score and to make sure that there are no errors on your credit reports. You are the one who is most likely to catch these errors so you have to be the one looking for them. Also, pay your bills on time. Late payments can make life more difficult in good times so you surely do not need to make things more difficult for yourself now.

Your credit score is incredibly important in a recession. A high credit score can offer you access to more credit when you need it. Vigilantly monitoring your current credit could help you to get more credit in the future.