Using Credit Wisely

By Tyanne Johnson

Credit

Credit is when you buy something but you promised to pay it back later.

You can build credit by getting a loan, having a credit card. A good credit score is usually between 350 and 850. The higher the number, the better credit you have. If you have a credit score that keeps going down, you might have a lot of debt, keep missing loan payments, not paying rent, and many other possibilities. Bad credit only stays on your credit report for seven years, bankuptcies stay on your report for 10. You can earn good credit by: making payments on time, not opening so many accounts, and not spending a lot of money. Credit Brueaus are in charge of your credit, but they don't make decisions on your credit.

Credit Reports

A credit report consists of your idenity, your existing credits, your public record, and inquires. Lenders, insurence companies, employer, and landlords can look at your credit report. You can obtain a free credit report once a year from annualcreditreport.com. If you get denied from a job because of your credit, the employer has to give you the information about the credit breau they got it from. Then you have 60 days to obtain a free report.

Tips for Good Credit

  • Make your payments on time because it takes up 35% of your credit score.
  • Keep your debt balances low, it takes up 30% of your score and most debt balances are calculated mid cycle so it's always good to keep them low.
  • Using too many credit accounts at once can make your score go down by 10%.
  • Use your cards wisely or else after a while they will close your account if they go unused.
  • Be patient. It takes a while for good credit to build up.