Building and Maintaining Credit
Welcome back to the “Repair Your Credit” E-book. Last time, we talked about eliminating consumer credit debt and considering whether that last line of defense – bankruptcy – was right for you. This time, let’s talk more about you’re going to rebuild your credit without excessive use of online payday loans in Washington or credit cards.
Good credit, meed financial success
A big part of financial success depends on building and maintaining your personal credit. Everyone has a credit scored determined by the nation’s three leading consumer credit bureaus. I’m talking Experian, Equifax and TransUnion. The credit score is then used by creditors to judge your financial reputation and how likely they think you’ll be to repay the credit you’re petitioning for them to grant you. The higher your composite score – your FICO score - the better your financial reputation. You’ll have more opportunities to obtain goods and services through credit. Not only that, but you will receive lower interest rates and be able to borrow larger sums of money that someone with a lower credit score would, whether it’s for buying a car, house, business or anything else.
Establishing a higher credit score will also allow you to obtain a line of credit with your bank. This may sound the same as being able to borrow larger sums of money like I just mentioned, but there’s an added perk: you will have access to funds on a regular basis without prior approval. This type of credit line can be a life-saver for a small business, because it truly does “take money to make money.”
Find your credit score
Start with AnnualCreditReport.com. It is the only guaranteed, FTC-backed source for one free credit report per year. You can obtain additional reports for a fee. However, a simple way around that is to download one free report from one of the three agencies once every four months. While the scores will vary slightly (each agency uses a slightly different scoring mechanism), you’ll have the information you need to discover any discrepancies.
For your information, the average US credit score is 678. A score of 750 or higher is highly reputable and all but guarantees you approval. Here’s a visual to help you see just where you fall into the grand scheme of the credit jungle:
Maintain checking and savings accounts
When you’re making that serious push to repair your credit, one of the first things you should do is make sure you have established a savings and checking account with your bank. If you don’t currently have one, now is the time to get one. Possessing and maintaining bank accounts is a good step to establishing credit. The older your accounts become without incidents such as overdrafts or bounced checks and the more savings you accrue by making regular deposits into your savings account, the more stability and responsibility you will be able to show as a consumer.
But there’s so much more to do. READ ON and see…
