10 Important Credit-Related Questions to Ask Yourself
Understanding how to build, rebuild, or maintain a strong credit standing often raises a lot of questions. To help arm yourself to optimize your credit standing or determine if you need credit repair, here are 10 important credit-related questions and answers.
1. Can I earn a credit score without a credit history?
Consumers with no history can build credit. Four ways you can do this include getting a secured credit card, asking a family member to add you as a credit user, getting a cosigned loan, or earning a nontraditional credit score.
2. Does closing a credit card affect my credit?
The short answer is, it depends. If you have several credit cards, closing one shouldn’t harm your credit but if you only have one, keep it open. The main thing is to ensure your credit utilization rate is under 30%. If over, pay your debt down so you don’t end up having to focus on credit repair down the road.
3. Does getting married affect credit?
Getting married doesn’t change credit because spouses have separate credit files. However, if pursuing joint credit, if one spouse has poor credit this could impact any rates or terms.
4. Will bad credit affect a job application?
Not usually. The only time bad credit might affect a job application is if the job has fiduciary responsibilities because it suggests you might have poor money management skills.
5. Can collection agencies collect on old debt?
In some states, there is a statute of limitation on debt collection. If you pay towards an expired debt, it restarts the debt. Also, even if not expired, old debt can often be negotiated to pay less than originally owed.
6. Do too many cards hurt my credit?
No, as long as you make payments on time and avoid falling too far into debt and don’t need credit help that can drag down your score to resolve it.
7. Can a loan be paid off early?
While some loans don’t allow for early repayment, most do. Even if it doesn’t allow prepayment, paying debt off shouldn’t hurt credit very much.
8. Does bankruptcy affect credit forever?
Declaring bankruptcy does harm credit as it remains on your credit report for seven years. During this period of time, you’ll need to focus on credit repair. It takes time but can successfully be done.
9. If a spouse passes away, do I pay their debt?
In many cases, one spouse is not responsible for the other’s debt unless the debt is joint or cosigned. However, in community property states a spouse is often responsible.
10. Does cosigning a loan impact my credit?
Cosigning is putting your credit standing on the line. Your credit will be affected by any positive or negative activity on the loan.
Actively paying attention can go a long way towards preserving a good credit standing. However, even if you do falter, fortunately, there is debt help you can pursue. Over time, you can build your credit score and standing back to a healthy level, and achieve financial freedom