Do You Really Understand Credit Well Enough?
I don’t mean to be a bummer, but it’s entirely possible that you don’t understand credit as well as an adult should. Let’s take a quick quiz! What is a credit reporting agency? What are three ways you can cause your credit score to go up? Why does a credit score matter? If you have a bad mark on your credit report, will it ever go away on its own? If you have trouble answering any of these questions, read on. And read elsewhere; there is more good information about credit than can be contained in a little blog post like this.
?What is a Credit Reporting Agency?
First of all, there are three. These are private companies that track the credit behaviors of all consumers. They are the ones who give you a credit score. In fact, you have three credit scores, one from each company. They look at how you pay your bills, how much debt you have, how many credit cards you have, how much you ask to borrow money, and lots of other things like that. They have master credit reports which cover many years of your financial life.
?What Are Three Ways You Can Cause Your Credit Score to Go Up?
There are obviously more than three, but here are some examples. 1) Never pay any of your bills late. 2) Don’t use more than 30% of your credit limit on any credit card. 3) Only have as many credit cards as you need and can manage. Unless you are an expert, never have more than 10. 5-8 is really pushing it for most people.
?Why Does a Credit Score Matter?
Credit scores aren’t just arbitrary numbers judging you. They actually tell lenders whether or not to lend money to you, and how much to charge you for the privilege. If you have a bad credit score, you might not be able to get a mortgage or auto loan, or you might get charged crazy high interest for the loan.
?If You Have Bad Marks On Your Credit Score, Will They Ever Go Away On Their Own?
Believe it or not, bad marks on your credit score will disappear…after seven years. If you can’t wait that long, you can dispute the mark on your credit history (details at AAACreditGuide.com), pay the debt in question, or just ride it out. If the matter is small, it likely won’t hurt your credit score enough to be worth the trouble. Any debt will eventually disappear, but you really have to pick your battles with this stuff.
There are so many other details to credit, but this guide shows you a random selection of the diverse questions that people need to know the answers to, regarding credit. Continue reading up on the subject. If you use credit, you should understand credit very well. This takes time and experience, but the knowledge will pay off, and you’ll do a lot better financially over time, than you would without knowing this stuff.