Credit Overview

Credit Essentials You Need To Know

Credit is only a tool, but a powerful one. Credit like a tool in the hands of someone who understands how to use it properly can do great things. However, credit when not understood and used carelessly can quickly take over and control the un-educated.

This is why it is so important for us to understand credit the tool before starting to use it. Below is a list of Credit “Must Know” items I’ve discovered.

Credit Is Not Cash

All too often as consumers we reach for the credit card as if it were cash. When we make this our habit we often find ourselves staring at pile of debt and credit problems. It’s always a good idea review our knowledge of credit and how each one of us use it.

Understand the Importance of Good Credit

Many people only think of or focus on their credit when they are looking to buy a big ticket item. Your credit and how you care for it comes into play in a wide variety of places and situations, from buying a home, insurance and even a job. Credit goes way beyond credit cards alone.

Good Credit Is Built Over Time

The use of credit plays a big part in each of our lives and our credit is a “history” built over time. This history is a good reflection to lenders when they approve a loan application on what the interest rate will be and the amount of down payment of security deposit required. There is a right way to use credit and build it for maximum impact.

No One Credit Card for Everyone

You’ll find many credit cards on the market. If you use a credit card (I try to use them as little as possible) find one that fits your needs before applying for a card. There are credit card rewards to meet many criteria. Everything from cash back, air miles and home improvement.

Anyone Can Get Into Debt

The use of credit should not be taken lightly. Borrowing makes you and nobody else the servant or slave to the lender. Too much debt can make you look very risky to a lender. Ask yourself these few questions before you access any credit. – I do!

• If I have cash why am I using the credit?
• Can I afford what I’m buying?
• Do I need it?

What’s In Your Credit Report?

Your credit report is made up of your credit history and scored giving you a credit score or grade. All your current loans, how you pay – on time or late all get complied. When you apply for a loan or get a new credit card the credit bureaus report this information to the lender.

• Do you know what your credit report says?
• Do you know what a good credit score is?

The law allows you to get a free copy of your credit report from each of the credit bureaus every year. There is no obligation or anything to sign up for.

Reduce Your Interest Rate – Ask!

A lower interest rate can not only save you money but help you reduce your debt faster. It’s as simple as picking up the phone and asking for a lower interest rate.

It’s Possible to Have Too Many Credit Cards!

Do you receive credit card offers like I do each week. If you don’t pay attention you could easily have a collection cards. I have two! One for personal use and one for business. Did you know that having too many cards can affect your credit rating?

Closing Out Credit Cards Can Hurt Your Credit

We’ve all been there. Some credit card company makes us mad and we want to close the account. Before you take any action you need know that closing an account can hurt you more than any pain you’ll cause your creditor.

Credit can be a helpful tool or a destroyer. Educate yourself about credit and monitor your use of it.