Whether you are a college student, a working professional, a parent or
a widow, building and maintaining good credit is essential. Major
purchases such as a home or a car and even employment opportunities
can depend on it.
WHAT IS CREDIT? CREDIT is DEBT but there is good debt and bad
debt. Good debt allows a borrower to purchase a long-term asset or
meet a financial goal (like funding a college education) by borrow
money today and paying it back at a rate and at an agreed-upon time.
Bad debt is out of control spending which is not properly managed or
analyzed.
HOW DO YOU BUILD GOOD CREDIT?
1) Guess what - - you set and stick to a budget (it is a discipline.)
2) Pay your bills on time.
3) Keep credit card balance low.
4) Have a mix of credit types. It is good to have a history
of repaying an installment loan but a revolving account
demonstrates more clearly that you can responsibily
manage credit.
5) Be aware of your debt-to-income ratio. Mortgage
lenders consider monthly payments compared with
your income. Most accrue real estate taxes and
insurance with loan principal and interest also.
6) Have some credit, but not too much.
7) Demonstrate stability.
8) Use caution when closing accounts. It can result in
an increase to your balance-to-limit ratio, making
you appear to be an increased credit risk.
9) Provide complete, accurate and consistent information
on your credit applicaitons.
10)Contact your lenders if you fall behind on your payment.
many lenders will work with you to set up a different
payment schedule or interest rate.
