Credit Improvement – Baby steps 🙂
Even though most people over the age of 18 know the importance of a good credit score, the path to achieving high marks may be elusive. The temptation to overspend, to live the “good life” by accumulating debt, is strong. If you stumble and fall, just pull yourself up. The effort it takes to repair a damaged FICO rating, the measure that determines your credit score in the United States, is rigorous and time-consuming, but it’s worth it.
Know What Determines Your Score
“Baby steps” are required initially, both to establish credit and to repair a less than stellar rating. Your credit score is partially based on such things as on-time payments for a car, an apartment or a charge card. But that elusive numerical rating, which ranges between 300 and 850, is also influenced by such things as total dollar amount of credit, duration of your credit history, the total dollar amount of credit available to you and what percentage is in play, and the number of credit applications made in recent months. Debt to income ratio is also considered.
There are three major credit reporting agencies and the scores can vary, but all use similar guidelines. The higher your numerical score, the lower your risk, important when you want to buy a home, seek a business loan, sign a contract or apply for a high-limit credit card.
Consider the Future
Your credit rating is also your key to continuing future stability, no matter what your current scores are. Rebuilding a favorable financial history is as important as learning proper methods of debt management. Monitoring fluctuations in your credit scores can also be a vital way to detect fraud and identity theft, all too common in the digital age.
Master a few basic credit tips: Make a realistic budget, and stick to it. Save something from every paycheck. Seek help from professionals. The “big three” of economic health are often considered to be impeccable credit, an emergency fund available for a crisis, and an effective retirement planning strategy.
Develop a Plan
If you have not yet taken the steps to assure credit stability, now is the time. Reassess your goals, restrict your spending, realign your budget, and rethink your lifestyle. By relearning basic steps, if necessary, you will soon be standing tall on your own financial feet, ready to embark on your “sprint” to the future.