Most people know that good credit is key to financial health.
Few realize that now more than ever strong credit is important. As
the economy struggles you’ll need to work harder to prevent a
credit score downward spiral.
An example of street markets accepting credit ...
Consumer advocates are angry that the algorithms used to determine credit scores are still top secret. You might be peeved about this, too. But take note: Until very recently you weren’t even allowed to see your credit score! Can you imagine how unfair that was for many years? The Fair Credit Reporting Act (FCRA) was established in 1996 and revised in 2004. The system is unjust, but, at least today you can access your report for free once a year. A report will allow you to correct any mistakes… but you have to pay to see your score.
Tightened Credit
Banks are nervously tightening their grip when it comes to lending
funds. Why should they lend to anyone except the people with
pristine credit? They should lend us the taxpayer money
used for the bailouts — but will they? Similarly, credit card
companies are pulling back credit limits in an attempt to control
increasing numbers of people unable to pay their credit cards.
Bottom line: Banks and credit card companies are looking after their best interest. Their best interest is to lend money to people with a proven repayment track record. Therefore you must do what you can to protect or increase your credit score.
Everything’s Connected
Your credit score is connected in multiple areas of your life. It
follows you as you search for an apartment or take a mortgage to
buy a home. A credit score can be legally obtained by potential
employers or insurers doing due diligence on applicants. If you
neglect your credit report and it’s score you can quickly find
yourself paying more for rental deposits, car insurance, mortgages,
and a host of other things. You can literally spend hundreds,
perhaps thousands of dollars more each year based on a bad score or
mistakes on your report. Therefore, it is important to spend a few
minutes each year evaluating your report from each of the three
credit agencies. You’re entitled to a free report from annualcreditreport.com
Bad Credit?
If you have poor credit or a report filled with dozens of errors,
don’t despair. While no one knows the exact methods used to
calculate a score, there are some proven strategies you can employ
to rebuild. First and foremost you must check your report and
correct any mistakes.
Here are more detailed steps.
Finally, it is good to consider an analogy. You can’t control the weather, but you can control what you wear. Likewise, you can’t control the economy, but, you can control how you shore up your most critical basics: your credit report and credit score.
Related:How to build your credit - 3 must reads!
Four Ways to Legally Clear Credit Card Debt
Death of the Credit Card Economy?
