What's In Your Wallet? Credit 4 Dummies

Good Credit Matters. Overnight everything dependent upon credit to include adopting a child, securing and keeping employment, and buying necessities like a home, cars, and STUDENT LOANS.

No one knows the true formula for how credit score are devised but we all can deduce that your score gives a pretty good snapshot about the types of purchases and fiscal decisions we make. Getting a credit card or a car loan is no longer a reasonable indicator of "good credit." Ironically those with questionable credit are marketed to more aggressively then those with better credit because the latter tend to be a big more impulsive and give little consideration to "how am I gonna pay for all this." After all, these companies make their money from fees, charge offs, and finance charges.

Why is credit important?

Shelter

Your credit history tells a pretty apt story about your priorities and your ability to pay your bills on time. Lenders need to know that you won’t default on your mortgage. Assuming you make enough to afford the home of choice, bad credit is not necessarily the end of the conversation. Typically it creates higher cost of borrowing or worse, and possibly denial of conventional loans. Awareness of your spending practices should not start the month you enter the market for a home; lenders want to see a history of good stewardship. Your credit is also used for rental decisions as landlords consider lease period as a loan of sorts.

Transportation

Most buyers finance their vehicles. Credit not only qualifies you for a loan, but also the amount and interest rate of the loan. Lenders should look at a borrowers debt to income ratio. This is why living within your means is important!

Employment

Many employers conduct credit checks as a part of their hiring process. If you haven’t demonstrated financial responsibility, a prospective employer might be hesitant to hire you. For example, the employer might believe your level of debt is too high for the salary offered. Often those with serious debt are considered risk as they are more likely to steal or commit acts of
dishonesty to improve their quality of life.

Entrepreneurship

Many people have dreams of starting their own business. Most business start-ups require a sizable amount of seed assuming you don't, you’ll need to obtain a small business loan which is based upon your personal credit history.

Utility Services

It might be somewhat shocking to learn that your credit is needed to establish utility service. You're in essence borrowing water, Internet and electricity month by month. They look at your history to determine your likeliness to pay, pay on-time, and pay in full.

It's important to know your what the credit bureau's are reporting about you and be prepared to pay what you owe or dispute what is erroneous. Understand that ever after you resolve these issues, not only does it take time for your score to reflect it, we also have to change our thinking with regards to credit.

Bureau Contacts:

Equifax
P.O. Box 740241
Atlanta, GA 30374
1-800-685-1111


Experian
P.O. Box 2002
Allen, TX 75013
1-888-397-3742


TransUnion
P.O. Box 1000
Chester, PA 19022
1-800-888-4213


As I started looking at my credit reports I found that there were a number of line items on my report that I had nothing to do with. Some were from when I was in 5th grade! If you feel you've been a victim of identity theft or are being misrepresented, communicate this to the reporting bureau and then contact Fight Identity Theft.