Making a large purchase like a car or house has many steps. One of the most commonly discussed and worried about is a credit evaluation. Having a good credit score is often the deciding factor of whether or not someone is approved for a loan. Sometimes the score can affect the type of loan a person receives or if they have a low or high interest rate. If a score is too low, the financial institution may have doubts that the person will be able to pay things back and can issue criticized loans. It’s no wonder that the credit score is so carefully monitored by many people.
Build Your Credit
It is a common misconception that having good credit simply means not having any debt. This is only partially true. Keeping bills paid off is a great way to build up credit, but having no debt or possibility for it may actually hurt a credit score. Having a car loan or low-interest credit card and keeping the balance paid up each month is a good way to build up a credit score without ending up buried in debt. It is also important not to get rid of every unused credit card, or to keep a single card to be used occasionally — for gas or special occasions – that is paid off by the end of each month.
Don’t Sabotage Yourself
Often stores will offer to let customers sign up for its credit card to get instant savings on a purchase. This may sound good at the moment but can harm a person’s credit if done often. Having several credit applications come through will show high spending habits and can negatively affect the credit score. Avoiding these credit card discounts may save a lot of money in the future.
It is important to regularly monitor credit. There are many free sites online to help with this. Each person should wisely care for their credit score so that when they need it, they will be able to get the best interest rate available.