Managing Your Credit
All About Credit
Credit is the ability to obtain services and/or goods now, and paying for them in the future.
Why Does Credit Matter?
Who Cares? Employers, insurance companies, mobile phone companies, car dealerships, banks, credit card companies, landlords and mortgage companies are just a few. Employers may use your credit report to determine your character – if you will be honest, accountable and responsible – before they decide to hire you. Others may use your credit report to determine what kind of risk is associated with you being a customer. For example, they may use the information to determine whether or not you are likely to default on a loan or not pay your bill.
Why Good Credit Matters
- Every purchase that is financed is more expensive if you have poor credit.
- Poor credit can make it harder to rent an apartment or buy a home.
- How much you pay for auto insurance is sometimes determined by your credit.
- Loans and credit cards are given at different interest rates, depending on your credit. You may not qualify if you have poor credit.
- Poor credit may prevent you from getting a job.
Steps to Improve Credit
- Make your payments on time – all the time.
- Pay off or pay down credit cards and other high-interest debt.
- Shop for loans in a short time span, preferably within 30 days so inquiries on your report don't negatively impact your loan terms.
- You're entitled to each of your three credit bureau reports for free every 12 months through www.annualcreditreport.com. If you stagger them and request one every four months, you can better monitor your credit.
- Get a credit card if you don't have one. If you can't qualify for a regular credit card, get a secured credit card.
- Have a range of credit types: secured and unsecured, personal credit (credit card), and larger types of credit (auto loan or mortgage).