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.
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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.
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Credit Score

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how to improve credit score

FICO Credit Score Presentation (1/2)

Maintaining it

  • 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.