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Why is credit so important?
Watch this brief video and develop a better understanding, how credit can impact you.
LETS TALK ABOUT CREDIT
Who is Examining your credit?
Cindy finishes college and begins a new job.
Her car is ancient, so she decides to purchase a new one with zero percent financing.
Cindy discovers that, after negotiating a decent deal with the dealer, she does not qualify for the zero percent rate because her credit score is insufficient.
The root of the problem is a lack of credit history.
Silent Bob and Jay want to refinance their home because interest rates are low and lower mortgage payments will help them with their cash flow.
Following their discussion with the loan officer, they discover that the bank would not refinance their loan due to changes in their credit report.
Late payments, incomplete payments, and excessive credit card balances are the culprits.
What our hypothetical consumers didn't grasp was the importance of maintaining excellent credit, the influence of credit ratings, and who looked at credit scores.
Credit reports were once only used by lenders; however, in today's environment, credit reports and credit scores are used by employers, insurance agencies, and utility providers when making judgments.
A strong credit score opens opportunities and saves money by lowering interest rates and insurance costs.
A bad credit score will have the reverse impact, and those with bad credit will likely pay much more for services and loans.
The number of late payments, collection activities, and bankruptcies is on the rise, according to recent figures on late payments and delinquencies.
According to a National Foundation for Credit Counseling poll from 2009, 26% of all Americans admit to not paying all of their bills on time.
This is a claim made by 51% of African Americans.
According to a survey by Sallie Mae titled "How Undergraduate Students Use Credit," one-third of college students pay their tuition with a credit card.
Sixty percent of those students stated their huge amounts astonished them, and they didn't have enough money to make the minimal payment.
Elevate Your Score!!
Outstanding credit and payment history account for a whopping 65 percent of a credit score.
The greatest strategy to maintain and enhance a credit score is to manage debt by minimizing both available credit and outstanding debt and paying bills on time.
Regularly checking a credit report, contacting credit agencies to update errors, developing a debt-reduction strategy, and keeping credit card balances below 35 percent of available credit all contribute to maintaining high credit ratings.
When striving to improve credit scores, consumers should be aware of several risks.
The amount of time a person has held credit, for example, is significant.
As a result, if some accounts must be closed to reduce the quantity of available credit, the accounts with the shortest histories should be closed first, while the oldest accounts should be kept open.
Furthermore, anytime a consumer requests for credit, the lender performs a credit check, which is recorded in the client's file. Too many credit checks could indicate that you have too much credit available.
There is a saying that time heals all evils, and that advice applies to credit scores.
Consumers need to give themselves time to establish or re-establish a history of responsible credit management and bill payment.
Paying the minimum due each month before the due date helps to raise a credit score and allows lenders to see that a person will repay loans in a timely manner.
Lastly, consumers who do not have an established credit history or need to repair their history should consider a secured credit card.
Consumers deposit money into an account with the lender and then can borrow, via the credit card, against the account.
Available through many lenders, a secured card is a measure that, if used responsibly, will help raise a credit score.
Consumers can obtain free credit reports from a number of different sites.
AnnualCreditReport.com, a government-approved website, allows individuals to receive one free credit report from each of the three credit reporting agencies: Equifax, TransUnion, and Experian, once a year.
Credit Karma, for example, provides free credit reports, credit scores, and a wealth of credit information, as well as interactive calculators and graphs.
Consumers should be aware that certain websites seem to be free but are actually selling credit-monitoring services.
Many companies will not deliver a "free" credit report unless the customer submits a credit card number and signs up for the service.
Credit reports: What You Should Know
Examining a credit report can be eye-opening, and many people begin to understand why their credit score is lower than they expected.
Credit scores are influenced by late and nonpayment notices, the number of open accounts, and the quantity of accessible credit.
If a consumer is having difficulties as a result of a bad credit report, the first move is to be defensive: Return to the source of the data: your credit report.
Consumers should look for any inaccurate information and call the credit reporting agency to get it corrected.
Consumers can submit discrepancy information online or print forms to mail back to Experian, Equifax, and TransUnion, which all have websites where they can do so.
The agency will investigate the claim and amend any incorrect data once it gets the challenged information.
If there are credit accounts on the report that the consumer did not open, they may be a victim of identity theft and should place fraud alerts on their credit report with all three agencies, close all accounts they did not open, and file a report with their local police department and the Federal Trade Commission.
Consumers must also be truthful with themselves about their circumstances.
While some people have credit issues as a result of a traumatic life event such as a job loss, sickness, or divorce, others simply live over their means and rely on credit to supplement their income.
One method to deal with this problem is to make and stick to a budget. Consumers can learn about budgeting and debt reduction from a variety of credible sources.
For Example US!