A good credit history is established by keeping your commitments to repay credit cards or loans as agreed, making your payments on time and in the amounts required.
Neglecting to do so make it difficult and costly for you to borrow money for the things you need for yourself and your family. This can affect essential areas in your life such as renting an apartment or buying a home, getting insurance, an education or even medical care.
Plan for emergencies!
Things in life occur that are not under our control, such as losing a job, or getting into a car accident, which can impact your ability to repay your bills. This is why it’s critical to set up a savings account and contribute to it on a regular basis. This will ensure you have emergency funds available to honor your credit agreements in spite of any unforeseen challenges.
Unfortunately, creditors don’t care what your situation is. If you’re late on a payment, they’re going to report it as late, and that late payment will remain on your credit report for 7 years. It will also have an impact on your credit score for the first two years. That’s pretty harsh for just one 30 day late payment, but that’s how it works.
What if you don’t have credit?
If you have not yet established credit, or you do not use credit, it’s in your best interest to apply for one or two cards. It takes about 2 years to really establish a credit history with enough information in it for a lender to make a risk-based decision for large purchases. You do not have to keep a balance on your credit cards if you’re adverse to credit. Just charge a small amount every other month or so and pay off the balance. This will ensure the account remains open and active with the creditor, and updates will be transmitted to the credit bureaus accordingly, which will give you the credit history you need, along with a good credit score.
If you are trying to re-establish your credit, and you cannot qualify for a traditional credit card, then one option that is guaranteed for you is to obtain a “secured card”. With this type of card, you deposit typically $300 to $500 in an account with the creditor and that amount becomes your credit limit. Because you are using your own money, there is no risk to the creditor.
A couple things to make sure of when applying for a secure card:
Make sure the company you’re applying with reports to at least one of the three major credit reporting agencies. If they do not, then move on, because if they do not report, you are losing a major benefit.
Shop around for the lowest annual fee. All secured cards charge an annual fee, and some can be pretty hefty. Make sure to read the fine print first!
Most secured card companies will allow you to get an “unsecured card” after about a year of making your payments on time. Be sure to check on this, because you don’t want to have a secured card any longer than you have to. It’s too costly.
If you belong to a credit union, ask them if they offer secured cards. About half of the nation’s credit unions offer secured cards to their members and they may offer lower interest rates and waive annual fees.
Use the secured credit cards carefully; paying off the debt each month. You do not get this type of card to carry a balance on it. Remember, you’re using your own money as collateral. You don’t need to pay the creditor interest on top of that.
Points to remember…
In summary, to establish a good credit history, remember to keep your overall debt at a reasonable level that is relative to your income. Generally speaking, your expenses should not exceed 20% of your net (after taxes) take home pay, excluding your housing payment.
Visit: http://RepairCreditTrauma.com
Neglecting to do so make it difficult and costly for you to borrow money for the things you need for yourself and your family. This can affect essential areas in your life such as renting an apartment or buying a home, getting insurance, an education or even medical care.
Plan for emergencies!
Things in life occur that are not under our control, such as losing a job, or getting into a car accident, which can impact your ability to repay your bills. This is why it’s critical to set up a savings account and contribute to it on a regular basis. This will ensure you have emergency funds available to honor your credit agreements in spite of any unforeseen challenges.
Unfortunately, creditors don’t care what your situation is. If you’re late on a payment, they’re going to report it as late, and that late payment will remain on your credit report for 7 years. It will also have an impact on your credit score for the first two years. That’s pretty harsh for just one 30 day late payment, but that’s how it works.
What if you don’t have credit?
If you have not yet established credit, or you do not use credit, it’s in your best interest to apply for one or two cards. It takes about 2 years to really establish a credit history with enough information in it for a lender to make a risk-based decision for large purchases. You do not have to keep a balance on your credit cards if you’re adverse to credit. Just charge a small amount every other month or so and pay off the balance. This will ensure the account remains open and active with the creditor, and updates will be transmitted to the credit bureaus accordingly, which will give you the credit history you need, along with a good credit score.
If you are trying to re-establish your credit, and you cannot qualify for a traditional credit card, then one option that is guaranteed for you is to obtain a “secured card”. With this type of card, you deposit typically $300 to $500 in an account with the creditor and that amount becomes your credit limit. Because you are using your own money, there is no risk to the creditor.
A couple things to make sure of when applying for a secure card:
Make sure the company you’re applying with reports to at least one of the three major credit reporting agencies. If they do not, then move on, because if they do not report, you are losing a major benefit.
Shop around for the lowest annual fee. All secured cards charge an annual fee, and some can be pretty hefty. Make sure to read the fine print first!
Most secured card companies will allow you to get an “unsecured card” after about a year of making your payments on time. Be sure to check on this, because you don’t want to have a secured card any longer than you have to. It’s too costly.
If you belong to a credit union, ask them if they offer secured cards. About half of the nation’s credit unions offer secured cards to their members and they may offer lower interest rates and waive annual fees.
Use the secured credit cards carefully; paying off the debt each month. You do not get this type of card to carry a balance on it. Remember, you’re using your own money as collateral. You don’t need to pay the creditor interest on top of that.
Points to remember…
In summary, to establish a good credit history, remember to keep your overall debt at a reasonable level that is relative to your income. Generally speaking, your expenses should not exceed 20% of your net (after taxes) take home pay, excluding your housing payment.
Visit: http://RepairCreditTrauma.com
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