Your credit score, in some ways, is your financial identity.
Take away for a minute your budget and ignore your income for just a split second, and think about how lenders and creditors can get a snapshot of just how good or bad you are as far as risk goes and giving you money.
That score sends the message that you know how to buy, handle debt and you’re expertly intelligent as far as manage your financial future. Yes, those three numbers smashed together let the world know that you’re either doing quite well money wise or if there is work to be done.
The reason that score is so crucial is easily identifiable. That score is the lifeblood of borrowing money, because if those numbers don’t read a specific amount, you’ll be waiting for quite some time for a bank or lender gives you a cent.
The easiest way to ensure your credit is safe is to simply pay on time. Late payments chip away at your score to the point that you’ll be a day late here, a week late here and then all of a sudden your score drops 20 to 30 points in a month. You want to avoid the dreaded 30 plus days of being late, because after 30 days, your late payment becomes something a creditor can report to the credit bureau or a collections agency. That spells even more credit score suffering since you can’t revert that once it’s been reported. It might not be technically sent to a collection agency but it will affect your credit adversely.
Another huge fail on the part of the financially stubborn is not checking their credit score at all. Plenty of services offer the ability to check your score or have it check for you and it won’t count as a hard inquiry against you (which would be a few points off if it indeed was that). Checking your credit is the same as looking over a test paper before you turn it in or perusing your taxes before submitting them to Uncle Sam. You want to make sure there aren’t any glaring issues on your credit report that often times are overlooked. Those mistakes aren’t your fault but not checking to see if they exist is just poor judgment on your part.
Having good credit means you can buy a house, get a car or have the financial freedom to do anything from consolidate debt to lines of home equity credit for a remodeling job. Not being able to boast good credit isn’t a matter of the evil Visa cards or a lack of income but rather not understanding how the score can be diminished.
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