Your Credit | Establish, Protect and Improve

We all know that we need good credit. You need it to get a house or a new car; some companies even do credit checks before hiring. What is credit, though? How do you get it and keep it in good standing? Credit is essentially borrowing money from a lender, with an outlined payback plan for the borrowed money. Let’s look at how you can establish, protect and improve your credit.

Establish Credit

This starts by simply borrowing money — could be with a car loan, credit card or any number of different types of loans. What really establishes your good credit, though, is the way in which you pay back the money that was borrowed, how you handle the money and your consistency in payments. Creditors are basically looking to see if they can trust you with money. Loan amounts and credit limits start out low, but as you show that you can be responsible, you will build your credit, allowing you to borrow more so that you can buy a car, a house or any other major life purchase.

Protect Credit

With all the talk of identity theft, how can you protect your credit from a thief? It is very important that you are mindful of where your debit/credit cards and account numbers are. Only keep the cards you plan on using with you while you are out shopping. Don’t give out personal or account information to parties which you aren’t currently doing business with.

You can also protect your credit by paying close attention to all your billing statements, making sure all charges are legit and for the right amounts. It is your responsibility to report any mistakes on your bill in a timely fashion, usually 30-60 days, and if you don’t notice and report it, the debt is assumed yours and you will be stuck paying for it. Overall, in protecting your credit, vigilance is the cornerstone to keeping your good credit.

Improve Credit

This is often where most people get lost. It’s easy to get in over your head. With our cultural “want it now” mindset, it is all too easy to get behind and feel as if you are drowning in the sea of debt. There is hope; you can restore, regain and get back on track with your credit. It must start by taking responsibility for your debt. You can’t just ignore it. Contact your lenders and try to work out a new payment schedule. Often they will work with you in creating a payment plan that you can afford.

Immediately stop purchasing with credit. If you can’t pay back what you currently owe, don’t add to it. If you have substantial debt, it would be a good idea to contact a credit counselor. You can start with the National Foundation for Consumer Credit – call (800) 388-2227. It will help you find a counselor in your area. Be cautious of debt consolidation companies that offer you a quick fix to all your problems. Remember that it took you time to build your credit in the first place, and that it will again take time to rebuild your great credit.

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