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Credit and Debt

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Credit is essentially how trustworthy you are financially. Companies look at your credit to see how confident they can be in your ability to pay off debt. If you have good credit, it shows that you’ve been financially responsible for a good period of time, making it easy for you to borrow at low interest rates. Bad credit can ruin your chances of getting a loan or a house and comes with much higher interest rates.

Your credit score is what most creditors will look at to determine whether or not to lend to you. Your credit score is based on income, debt, bill payment history, collections actions, number of loans, types of loans, and credit limits. If you have a low score, creditors think that you’re more likely to default on a loan.

Your credit report is also used by creditors, and includes your name, address, phone number, social security number, past employers, spouse, lender names and accounts, balances, loan payment history, any repossessions, and other creditors who have requested your report over the past two years. This report can also include criminal proceedings and bankruptcies, as credit bureaus collect information from courthouse and registry records.

You should be checking your credit report regularly to see if you have any incorrect information that you want to dispute with the credit bureau. You should also close any inactive accounts.

If your credit score is low, it can be improved by paying bills on time and paying off your debt.

Once a year, you’re entitled to a free copy of your credit report. Visit the following to obtain yours:

Credit Cards:

Interest fees, annual fees, late fees, payment terms, security, and benefits are all important factors to consider when looking at credit cards. Make sure you know:

  • What your Annual Percentage Rate (APR) will be, and whether it’s for a limited time or not.
  • Whether or not you’ll be charged different interest rates for balances, transfers, and purchases.
  • Whether or not there’s an annual fee
  • What the grace period is between purchasing and getting charged interest.
  • What type of fraud protection the company offers.

It’s important to remember that credit cards are not free money, but a loan that can have high interest rates. Pay off your balance each month in order to avoid interest, otherwise you end up paying more for your goods than when you purchased them. Keep your spending low or limit your credit card usage for emergencies only to reduce spending.

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