Establishing Credibility With A Credit Score
Credit is a powerful financial force to be reckoned with. On one hand, it can allow you to get the things that you need now in order to be successful enough to pay for them (with less pain) later on. On the other hand, it can allow you to spend money that you don’t have, which can get you into trouble down the line.
New Era Debt solutions offers 5 pieces of advice when it comes to wielding credit in order to gain financial success:
1. Know Your Score
Your credit score is subject to fluctuations based on lines of credit, payments, inquires, and even what algorithm is being used to calculate it.
If you check your own credit score (this is called a “soft inquiry), this should not affect it. It’s important to check your own score periodically to be aware of where you stand and be able to preemptively do something about a score that’s lower than you’d like.
However “hard” inquiries, which are made by banks, credit card companies, and mortgage lenders, can lower your score. Fortunately, hard inquiries typically will require your permission first. This is why you shouldn’t attempt to open several lines of credit in a short period of time.
2. Be Diligent
Failing to make your payments on time can and will show up on your credit report, and while it’s not the end of the world, it can stay on your report for as long as 7 years. Not to mention, if you try to take out another line of credit to make these payments, you may be rejected due to your tarnished history.
Foreclosures, repossessions, and bankruptcy can stay on your credit report for even longer, making it harder for you to get new lines of credit when you need them most.
Perhaps the most dangerous ding to your credit score is not paying your taxes, which can result in a “lien” on your property that can stay on your report indefinitely until you pay it off. Even when you do, it will still stay on your record for 7 years.
You should also be hesitant to close old credit cards, even if you don’t feel you need them or use them anymore. Credit is built up over time and closing your oldest line of credit can actually mar your credit history.
3. Borrow With intent
The most important and counterintuitive credit strategy is to open lines of credit when you don’t need them. This allows you to build a strong credit score and have available lines of credit for times when you do.
Ultimately, having a strong credit score can allow you to have a better car, live in a nicer neighborhood, and even get your dream job. If you can build and make improvements to your score while things are running smoothly, it will carry you through times when finances are more difficult.
New Era Debt Solutions has settled more than $250,000,000 dollars of debt since 1999 and wants you to be our next success story. If you need assistance achieving financial freedom, contact one of our friendly counselors at New Era Debt Solutions to learn more about finding the debt relief option that best fits your needs and budget. Our counselors are with you every step of the way.