Wanna Make A Bet?
By Will from Holland
I'm betting you know what credit is: an arrangement for you to pay for something at a later date. "Okay, gimme the car today, and I'll pay you later."
But do you know what your credit score is? Okay, have you even heard of a credit score? More importantly, do you know how important that credit score is to the rest of your life?
A credit score tells businesses if you pay like you said you will pay.
Credit scores are used by about every business to determine if you are trustworthy. And that score follows you everywhere.
That's why credit is so powerful. In fact, it's one of the most powerful things you'll ever possess.
Think about this: Do you have $10,000 in cash to pay for a new set of wheels? No? Well, do you have $250? Credit lets you do that.
- Have a good credit score, and you get a cheaper loan when you buy that set of wheels.
- Have a bad credit score and you can be forced to pay excessive interest rates.
Credit impacts everything that you do:
- Want to own your own crib some day? A bad credit score will keep you from getting a good mortgage—or any mortgage.
- Want a better job? Plenty of employers won't hire you if your credit is bad.
- Buying insurance? Bad credit can increase what you pay.
- Changing telephone companies? Some companies don't want you if your credit score is bad.
Only you determine what your credit score is.
These five actions usually determine your credit score:
- Do You Pay On Time?
If you pay your bills in time, your credit score goes up. If you don't… Well. Duh!
- How Much Do You Owe?
Do you have a loan? Do you have a balance on a credit card? How much "credit" you have outstanding determines part of your credit score.
- How Long Have You Had Each Piece Of Credit?
Have you had a loan for 2 weeks, or have you been making loan payments for 5 years. The difference matters.
- What Type Of Credit Do You Have?
A credit card with a $1000 limit is more important than a $25 credit at the local candy store.
- How Much New Credit Do You Have?
Did you just apply for 5 credit cards with those cool gifts? Your credit score goes down.
If you're college-age, you can build your credit right now, on your own.
Go to FoolProof Solo right now. Watch the intro video & start working through the modules.
You've always wanted to be independent, right? Well, this is where you start: with your credit!
Hope this helps!
PS. Everyone's credit situation is different and the suggestions shown in this article are a guide for improved financial awareness and not a guarantee of better credit.