Good or bad Credit? Your Choice.
By: Jose Nunez
What is credit ?
Credit is when goods, services, or money is received in exchange for a promise to pay a definite sum of money at a future date. Reasons on keeping a good credit you get to have a nice house,car, and possibly starting a business on your own.
The right person
Paying bills on time, Always having the right and good credit score, And having the good job as well.
What is a credit score
A credit score is a three digit number calculated from your data-rich credit report and is one factor used by lenders to determine your creditworthiness for a mortgage, loan or credit card. Your score can affect whether or not you are approved as well as what interest rate you are charged.
how to improve credit score
FICO Credit Score Presentation (1/2)
- Keep track of your spending: Keep track of the checks you've written, credit card transactions, and ATM card usage. Review your monthly statements when they arrive, and report any possible discrepancies immediately.
- Don't exceed your credit limit on lines of credit and credit cards: Your available credit is how much credit you have left on a line of credit or credit card; it is your credit limit minus your outstanding balance. Be careful to keep your spending below this amount. Following the “20/10 Rule,” it is a good practice not to let your credit card debt exceed more than 20% of your total yearly income after taxes. And each month, don't have more than 10% of your monthly take-home pay in credit card payments.
- Have an emergency fund: Keep at least a 15% cushion of available credit in case of emergency. Or better yet, keep an emergency savings fund of three to six months' living expenses in a liquid, interest-earning account. That way, if you lose your job or have a big unexpected expense, you don't have to borrow more than you're comfortable repaying.
- Pay what you owe: Always pay at least your minimum monthly payment. By paying more than the minimum – or better yet the full balance each month, this will reduce the finance charges you may incur. Be sure not to skip any payments.