Credit report (II)

Q: How do I get bad credit?

A: First thing's first. Credit score: FICO scores range from 400-800. If you have no credit, you're somewhere in the middle. Your job is to take responsible measures to increase your credit score. Timeliness is godliness in the world of credit and paying every loan (traditional or a credit card, for example) is imperative. Late payments erode your credit. When it comes to credit reports, there are 3 factors to consider: Good credit, debt to income ratio, bad credit.

Good credit: I've mentioned this is built over time and by demonstrating positive money management. If you have no credit to speak of, your score is middle of the road right now. You want to make good spending decsions and gradually push your credit score higher and higher.

Debt to income ratio: How much you owe compared to what you earn. Many people don't realize this is a factor until they make a "big-ticket" purchase. But it is taken into consideration when you borrow money. Too much debt to what you earn looks risky to borrowers and will affect your ability to borrow money and how much you pay to do so. High debt to income ratio also impacts you when time to seek out a consolidation load to transfer credit card debts. Many people seek consolidation loans to relieve debt problems and transfer their bills to card or loan, leaving them with one payment, ususally with a low interest rate, with the intention to aggressively pay off this loan. High debt to income ratio can eliminate this option.

Bad credit: Happens frequently when people take on more than they can handle. This isn't always the result of credit cards but is the case for many. Bad credit is the result of charge-offs, maxed-out credit limits, late payments, bankruptcy, other delinquencies.

Q: Should I use a credit card to build my credit?

A: Credit cards are a big responsibility and mismanagement carries great consequence. Using credit cards to build your credit can backfire and you can quickly do more harm than good to your credit report. Building credit takes time, an abililty to demonstrate positive money management skills, and it's really wise to wait to use credit cards until you understand exactly how they work.

For in depth information about how & why to avoid credit card debt, how to correctly use a credit card, and simple basics on how to get ahead with your money, you should GET A COPY OF THIS BOOK and memorize it.

More questions? Follow my daily webBlog for thoughts on debt today & more answers to money questions. If all else fails, email me! I'll get you an answer.

Comments

[Amsterdam Städtereisen]

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[Städtereisen Budapest]

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