Be Financial Savvy!

Now that the holidays are over, people seem to be tightening up their financial belts. Family, friends and participants are implying that they overextended their financial situation due to overbuying for either the holidays or for a special occasion.  It is very important to keep our finances controlled and accountable especially since our financial situation can affect our credit score.

Credit scores are vital in our financial world since they are designed to give lenders a fast, accurate prediction of the risk involved in giving you a loan. Scores range from 300 to 850, with the vast majority of people falling in the 600s and 700s. The higher the score, the more access to credit and a better borrowing rate you will have. Credit scores are used to improve your credit worthiness such as for negotiation of loans for the best possible term.

So what is credit history? Everyone gets a copy of their credit history with their credit report. Here are a few steps to build up your credit history in case you have a low score due to a blemished credit record or are just beginning to establish credit:

  • Pay your bills on time.
  • If you have missed payments, get current and stay current.
  • Know how much you owe; keep balances low; and pay off debt rather than moving it around.

The length of your credit history/age of account(s) matters — usually the older it is, the better because this offers lenders a clearer picture of your credit worthiness.

RED FLAGS potential lenders look for in your credit report may include:

  • Late payments
  • Recent credit inquiries
  • Underpaying
  • Liens
  • Overextended credit
  • Paycheck garnishments
  • Bankruptcy

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