Yes, loan eligibility is an amazing credit score benefit, but getting lower interest rates on those loans is even more important. The better interest rates you qualify for put money directly back into your own pocket. This goes for rates on other services as well. Having a low credit score can actually add one to two points to a motor vehicle insurance premium. Why is this related? Your ability to make responsible payments is also important to insurance agencies, credit card companies, cell phone providers, and more. Maintaining a great score will help you to save money in all of these areas.
If you are an owner of a small business, getting a line of credit or small-business loan may be imperative to your success. If a business is less than three years old, personal credit plays a huge factor in your eligibility and interest rates. At this stage of small business, lenders have trouble making a distinction between your business credit history and your private credit score.
If you are not a business owner and work better in a job atmosphere, there are even rewards in the job market. Many professional employers actual do a credit check before a new hire. These high level employers consider your credit score a representation of your responsible behavior. An employee that has difficulty managing their own finances might not be the best person to take care of company needs. This is especially true for employment in fields that are especially tied to financial practices such as banks, accounting firms, and treasuries.
The biggest advantage to a high credit score is the buying power you will possess. The possibilities for investment and rates on large purchases are much better. You will spend less on a new car, be able to make a big investment in a growing real estate market, or get the loans you need to send your children to the best college. The opportunities are almost limitless when credit is handled well. If you don't have a great score right now, it is never to late to get started on your way to rebuilding it or building it up for the first time. There are a number of helpful online sources to assist you. Start by getting a free credit score report from an online provider.
Do your absolute best to have credit card industry insiders refer to you as a 'deadbeat' or 'freeloader'. It may not sound like something you want but for those of you interested in a high credit rating those terms are music to your ears. 'Deadbeats' are people that pay their credit card balance off in full each month.
To know why these financially savvy customers are referred to as 'deadbeats', lets look at it from the credit card company's point of view. The CEO's of credit card companies ideal customers are 'revolvers'. Revolvers are customers that carry college debt and credit card debt; that's how they make their money. Their ideal customer is one that make the minimum payments. These people will have carry credit card debt for a long time. Depending on the interest rate, if you make just the minimum payments, it could take you more than 15 years to pay credit card debt off.
Credit card companies also like customers that frequently make late payment and go over their limit. Just by paying late, credit card companies can jack up your interest rates and charge you additional fees. Going over the limit can have the same consequences. The credit card companies may force you to pay the balance below the limit or you risk having these fees add up month after month.
So strive to be a 'deadbeat' and 'freeloader'. Always strive to be the credit card companies worst customer! This is the first step to long term financial success planning.
Use credit cards to build your credit score. Before you empty your wallet or purse and destroy your credit cards, it is important to understand the benefits of having open revolving credit. Of course credit cards make it easy to reserve a hotel room, rent a car and are a convent way to pay. It's important to understand that they do a lot more. Credit cards are an important tool in your financial toolbox.
Credit cards offer you an effective way to raise your credit scores. Most already know that by having good credit scores it will help you qualify for loans easier. What's more you could receive lower rates and lower closing cost. A side benefit of higher credit scores is that it will help you avoid the embarrassment of being denied for a loan.
Credit cards can raise your credit score becasue of the way the credit bureaus grade you. Credit bureaus grade customers based on their ability to repay loans (debt). So if you never established or maintain credit transactions, your credit scores will be lower. So if you always pay cash and don't have any loans you will have poor credit.
An easy way to understand this is by looking at how teachers grade you in school. If you have never taken a quiz, test or completed and assignment then how can the teacher grade you? It's the exact same thing with the credit bureaus. It's your responsibility to prove to the credit bureaus that you have the ability to repay debt. So by using your credit card and paying it off in full each month you are rewarded with a higher credit rating.
To use credit cards to raise your credit score there are some simple steps you can take. First, once you have a working budget and money saved, build up $25,000 to $45,000 worth of available revolving credit. Then use your credit each month and pay them off in full. Make sure not to carry any balance over otherwise you will have to pay interest on the amount you owe. By paying it off in full before the next month you will not have to pay interest charges to the credit card companies.
Before starting to build your credit scores it is important you take the necessary safety precautions. Make sure you are financially secure before starting to use credit cards to build your credit score. Before you go apply for a credit card you must have:
1) Six month of bills saved. You should have an emergency fund that is equal to six months worth of your monthly bills. Set this money aside in your savings account. To illustrate, if you have bills of $1500 a month you should have $9000 in your savings account. That way in case anything unexpected occurs you will avoid the credit card debt plague.
2) A working budget. An easy test to see if your budget is working is if you're able to save money each month. In other words, check to make sure that you bring home more money than you spend.
3) Automated bill payment method. Set up an online automatic bill payment for all your bills that are reported to the credit bureaus. By having an automated system in place you won't have to worry about forgetting a bill. It can happen easy and one late pay will haunt you for 7 years.
4) You are in control of your spending. If you're the type that will spend money if you have it, you probably should consider waiting to get a credit card. Work on improving your spending habits and make sure your in control before getting a credit card.
5) Protect your identity. Make sure to destroy all financial statements. Shred all sensitive documents before throwing it away in the trash. There are plenty of dumpster diver that would love to get a hold of your personal information. Also be careful when submitting personal information online.
Those 5 steps will help you to become a great 'deadbeat'. A 'deadbeat' with a great credit score!
Both Mike Clover & Vince Shorb are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Mike Clover has sinced written about articles on various topics from Free Credit Report Score, Marketing Campaign and Free Credit Report Score. is the nations leading resource for credit reports and credit scores.Learn what most don't. Mike Clover's top article generates over 49500 views. to your Favourites.
Vince Shorb has sinced written about articles on various topics from Free Credit Report Score, self improvement and motivation and Family. Vince Shorb, author of 'Financially Free by 30', has personally reviewed the credit reports of over 10,000 people. Get more real world, practical credit advice and free training videos at. Vince Shorb's top article generates over 22200 views. to your Favourites.