What is a credit rating?
A credit rating is a measure of your credit-worthiness. It's a ranking based on your history of timely payments and how responsibly you've managed credit in the past. Credit Bureaus use your financial history to determine your credit rating. You can order your credit history and rating from Equifax, one of the leading credit bureaus.
What does a good credit rating mean?
A good credit rating indicates to others that you are a "good" credit risk. You manage your debts responsibly and are likely to pay back what you've borrowed. The longer your credit rating remains unblemished, the more confident others will be in lending to you.
Why should you establish good credit?
You may need good credit for such routine matters as having the utilities connected to your home.
Good credit is important to secure financing when buying furniture, a computer, car, or even a new home.
Employers often check the credit rating of prospective employees.
A solid credit rating reflects positively on your ability to manage your job responsibly.
Renting an apartment may be easier. A good credit rating tells landlords that you are a person who's more likely to pay the rent on time each month.
You may be eligible to receive loans for education.
If you need access to large sums of money, banks may look more favorably upon giving you the loan you need.
Strong credit references can open a world of financial opportunity.
Someday you might want to use credit to finance a business.
Maintaining Good Credit
Managing credit can be a challenge. There's no better way to keep out of debt than by tracking your spending and sticking to a budget. A budget can help you control your finances, decrease your debt, and build a strong credit history. Below are some tips for managing your credit: Keep Track of your Spending
Keep track of the checks or "drafts" you've written and track what you owe. Make sure your statement is accurate. Review your monthly statement when it arrives, check for any possible discrepancies and be sure to report them immediately.
Pay What You Owe
Pay at least your "Total Minimum Due" by the "mail by" date on your monthly statement to keep your account in good standing.
Don't skip any payments and try to pay more than the minimum or even the whole balance each month.
New spending and carry-over balances combine to increase the amount of your average daily balance — and the finance charges you will owe. You can decrease this expense by paying down your balance as much as possible each month.
Do Not Exceed Your Credit Limit
Your "Available Credit" is how much credit you have left (your Credit Limit minus your Outstanding Balance). You should always keep your balance lower than your credit limit.
Be sure to add any charges you made after your monthly statement's closing date to your Outstanding Balance to find out how much credit you really have left (Available Credit).
Keep at least a 15% cushion of Available Credit in your account in case of emergency.
Make Timely Payments
Pay attention to the "mail by" dates for bills so that they arrive on time. We recommend that you mail your payment a week before the due date. You can be charged additional fees if it's late.
If you are moving, fill out the change of address form to ensure that your statement goes to your new address. You are responsible for your balance even if your statement goes to the previous address.
Stick to a Budget
In general, less than 10% of your monthly income should go towards paying off your lines of credit, personal loans or credit card bills. If you are paying more, it's time to reconsider your monthly spending.
Watch large impulse buys. These buys are especially hard to pay off.
Use your line of credit for emergencies that require cash. Cash Advances from credit cards are the most costly way to use credit since you will pay higher interest rates and fees for cash than for purchases. A line of credit, however, will not cost you extra fees or higher interest.
Get Your Finances under Control
Create a payment plan that will get you back on track. This plan should include whom to pay and how much to pay them each month. Then keep your word and pay these bills on time.
Limit your credit use until your finances are under control.
Contact creditors and discuss payment schedules that you can afford. Creditors will want to work with you to find a payment solution.
Use other available resources: Contact the NFCC (National Foundation for Consumer Credit) for suggestions and tips.
Close any accounts you do not use.
Learn More About Credit Reports
Learn More About Credit Reports
Most credit information remains on file for seven years and can greatly influence the options and opportunities available to you in life. Even though you may not need credit today, by thinking ahead, you can establish a good credit history for when you need it in the future.
What is in your credit report?
Personal and employment information
Payment history
Inquiries into your credit history
Any bankruptcies, lawsuits and liens
Remember that bill you decided to ignore... yes, that's on there too.
Your credit history can contain an accounting of how well you pay off your rent, utilities and loan payments, and how well you manage your bank accounts. It's also a great way to make sure any accounts you closed are really closed.
So how can you tell if you have good credit?
The National Foundation for Consumer Credit (NFCC) suggests you check your credit history at least once a year. You can order your credit report from Equifax to see your credit history online. Keep track of your financial record. When you get your report, if you see anything wrong, call the credit bureau immediately for more information!
Have you checked your credit report lately?
If you're thinking of making a big financial decision, like buying a house or a car, it's a good idea to take a look at your credit report before applying for a loan. This gives you time to clear up any discrepancies and work on improving your credit profile to help make it easier for you to get approved.
Know the score
Get educated about your credit. AutoBySite.com has arranged with Equifax, one of the leading consumer credit agencies in the U.S., to make it easier for you to get a copy of your report online — safely and quickly.
Equifax offers four great products.
Choose a link below to learn more
3-in-1 Report — obtain your complete credit history from all three credit reporting agencies in a single report. Just $29.95.
Equifax Credit Profile™ — get online access to your personal credit report. Just $9.
Equifax Credit Watch™ — be notified when changes happen to your credit profile. This can be an early warning of identity theft or inaccuracies. Annual subscription only $69.95.
Equifax Score Power™ — see the credit score that most lenders use. Score Power is currently the only online service with your FICO® score. Just $12.95.
Get access to your credit information today, and be prepared for your big financial decisions.
