Payday Loans, Establishing, and Maintaining Good Credit

Good Credit and Financial Success Go Hand In Hand

A big part of financial success depends on building and maintaining your personal credit and it may mean taking out payday loans to help keep this on track.

Your credit score

Everyone has a credit scored assigned to them as determined by the nations three leading consumer credit bureau’s. The credit score is then used by creditors to judge an individual or entity’s reputation of financial responsibility. The higher the score, the better the reputation, which then provides more opportunity to an individual to obtain goods and services through credit. Good credit will significantly reduce your interest rates as well as provide you with the opportunity to borrow larger sums of money for times such as buying a car, a house or investing in a business opportunity.

Establishing a higher credit score will also allow you to obtain a line of credit with your bank. This then allows you to have access to funds on a regular basis without prior approval. Lines of credit such as these are extremely beneficial to small business owners and investors as well.

You have probably heard the old saying “It takes money to make money”. Opportunities to make money and or grow a business are largely dependent on your personal credit.

So how do you know what your credit score is?

The three credit bureau’s which hold your financial well being in the balances are Equifax, Experian, and Transunion. These three agencies will each give you one free credit report a year. Additional reports can be obtained but will cost you. You can avoid these expenses by choosing to download your credit report once every four months using a different agency each time. This will also allow you to periodically review your credit for discrepancies.

All credit scores are not the same because each credit bureau uses its own scoring mechanism. Many lenders use a third party credit scoring system such as FICO to evaluate the credit worthiness of a borrower. This systems takes into account the scores of the three leading agencies.

The chart to right will help you get a feel for what number accounts for a good credit score. The average US credit score is 678. A score of 750 or higher is highly reputable and all but guarantees you approval.

Maintaining a Checking and Savings Account

One of the first things you will want to do is establish a savings and checking account with your bank. If you don’t currently have one, now is the time to get one. Possessing and maintaining a bank accounts is a good step to establishing credit. The older your accounts become without incidents such as overdrafts or bounced checks and the more savings you accrue by making regular deposits into your saving’s account, the more stability and responsibility you will be able to show as a consumer.

Pay Your Bills On Time

Paying your bills each month on time and every time is absolutely crucial to establishing and maintaining good credit. It does not matter how big or how small the balances are, if payment is overdue by thirty days or more and is turned over to collections, the incident will be reported to the credit bureau’s and you will receive a penalty that will affect your credit score for the next 3 years as it takes 36 months before a late payment is cycled off of your credit report.

If times are tight and you are faced with a decision to pick and choose which bills to pay, it is smartest to pay bills such as your mortgage payment and all personal credit card bills first. These types of creditors will penalize you and report late payments that will hurt your score. If you have to let a bill lapse, let it be a utility bill or the like. These companies tend to be a lot more lenient and cooperative with setting up payment plans and so forth and avoid reporting to the collection agencies unless absolutely necessary.  It can be worth it to look into payday loans instead of letting a bill lapse.

Keep Your Credit Card Balances at a Respectable Level

When it comes to consumer credit cards, be advised that just making your payments on time is not enough to please the credit bureau’s. A close eye is also kept on the outstanding balance as compared to your available credit. You should never use more than thirty to fifty percent of your total available credit. Tapping your credit cards makes you look like you are a risky overspending consumer. Keeping your balance to the lower end of this range will pay back big dividends in terms of credit worthiness. The best solution is to keep your debt to a minimum.

If possible keep your balances at zero by paying off your statements in full each month. Remember, your accounts don’t have to carry a balance to establish credit, they just need to be in good standing.

When Was The Last Time You Had A Piggy Back Ride?

One of the easiest ways to establish credit is to piggyback on someone else’s credit. Ask someone you know and trust, and who trusts you, to let you be a card holder on one of their accounts. They don’t have to actually give you the card to hold or use but by simply listing you as a card holder, their credit account information will show up on your credit report thus giving you a positive boost to your credit ranking.

Dealing With Past Debts

When dealing with past debts don’t let them take precedence over your current debts. The newer the reported debt or delinquency the more detrimental it is to your personal credit. Paying off a past collection will not remove the incident from your report so be sure to keep your current bills current and deal with the past as you get around to it. The past will eventually disappear. Negative credit history depending on the type cannot stay on your report for more than seven years with most incidents leaving after three.

Although we don’t promote financial irresponsibility, if you have a large outstanding debt and or judgment against you already, it may be beneficial for you to know that the statutes and limitations for a creditor to collect a debt. This is usually around four years. Every time that they receive a contribution to this outstanding balance the statute of limitations is renewed and starts over. If your consumer debt is going to take you longer than four years to pay off, it may be better to focus on the future and not make the same mistakes next time. Once the statute of limitations expires you will have to wait the additional thirty six months before the incident leaves your credit report.

Thinking About Applying For That Job

Alert! More and more employers are now making it a requirement to run credit checks on applicants before choosing to hire them. This is sound reasoning as a higher score means more financial responsibility. To the employer this speaks volumes about who you are and how responsible you are. The employer wants a consistently hard working individual who is both on time and responsible. Your credit report they believe may tell them just what they need to know before hiring you.

In Conclusion…

When it comes to credit, responsibility is key. Learn to budget and manage your money and never spend more than you can afford to pay back. Building credit is a slippery slope and those who catch the “Buy Now and Pay Later” bug we’ll end up paying later in a big way.

Because credit determines your interest rates on consumer credit cards, mortgage loans, auto loans etc. A healthy credit score will save you thousands of dollars over your lifetime, and that will mean payments that don’t require payday loans to keep up with. It’s an endeavor that requires diligence and patience but it’s returns are irrefutable and highly valuable.