Good credit is very important these days, especially now that banks are so loathe to lend out money. If you have good credit, you will have access to more loans, better interest rates on those loans, and an easier time getting money for a house, car, or whatever else you may need a loan for. Whatever you do, make sure that you stay on top of your credit, and don’t let it go unchecked, as everything you do, or happens under your name goes on your credit report. Your good credit score is the key to a good life in the future.
How do you go about getting a line of credit? If you are young, or just don’t have a credit history, getting a small loan, or line of credit is a good thing. If you can start off with a cell phone bill, or a student loan, you will have something that you can pay off that will build up your credit history. Not having a credit history is almost as bad as not having good credit, and will keep banks form lending to you.
Once you have a solid credit history, you have to maintain your score. You do this by not paying anything late, and not defaulting on any loan. A default is when you stop making payments on a loan, and if you declare bankruptcy you really are in a bad way.
Bankruptcy is when you tell your creditors that you cannot repay your debt, and the debts are wiped clean. However, a bankruptcy stays on your credit report for seven years, and is a huge red flag when applying for a loan. Typically you should try repaying your debt, or having your debt consolidated, instead of applying for bankruptcy. Chances are you still will be responsible for repaying some of the loans even if you declare bankruptcy.
Even if you make one late payment, you credit score can be lowered. Typically a lender won’t put anything on your credit report unless your payment is later than 30 days, but to be safe all payments should be made by the due date. If you can’t pay exactly by the due date, most loans will have grace periods, or an extended window where you can pay and not pay any type of late fee. Typically the window for not having to pay a late fee will be 10-15 days from the due date on your payment.
Getting and maintaining your credit is simple,a nd easy if you keep up with it. Just make your payments on time, and don’t bite off more than you can chew. Remember that a credit card is not extra money, but a loan just like any other, that needs to be paid back, and done so on time. Also make sure you have a credit limit you stay within, such as 1000 dollars, so that you don’t go overboard with your spending.
If you can keep your credit clean you will have a much easier time getting loans in the future. Not only that, but you have a better reputation as someone who is responsible, and can be trusted with money.