Welcome back. CLICK HERE if you missed part three of this article.

You’ve made it to the very end of “Repair Your Credit,” and let’s keep going to the end by taking a continued look at what credit agencies look at when they produce a credit score for you. That score determines how likely you are to get a good deal on a credit card, but typically has no bearing on whether or not you can be approved to receive a payday cash advance loan.

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• What are your spending habits?

How you use your credit is also a criteria examined by the credit bureaus when they develop your credit score. When looking at your credit accounts and account balances, they are able to determine just how conservative you are as a consumer spender. If your credit lines are maxed out or close to your available credit limit, you would be considered much more of a risk.

In contrast, avoiding a revolving credit balance by paying your consumer credit cards off at the end of each month or billing period will show you to be a far more conservative spender and therefore less of a risk to lenders. Just because you make your payments on time does not mean you automatically have good credit. Your spending habits can come back to bite you in more ways than one.

• Age of your credit accounts

It is difficult to determine exactly what model each of the three credit bureaus use to score your credit, as this information is proprietary and confidential. However, the length of time over which you have established positive credit history is likely a key factor in your score. Establishing good credit is a lifestyle of financial responsibility. Your score is determined by analyzing many factors, including your time in good standing.

• Number and frequency of creditor inquiries

Every time you apply for a consumer credit card, car loan, home mortgage etc., you incur a credit inquiry on your report. A credit inquiry is a creditor obtaining your credit information via your consent and social security number. The more inquiries that you have over a given period can greatly affect your credit score. New lenders see a barrage of financial responsibilities for which you may become responsible. This makes you seem a little more risky, as lenders may believe you are overextending yourself.

• Credit variety

There are different types of credit for which you can be approved. Credit bureaus look for a variety of installment loans and revolving loans. Credit bureaus like a mixture of auto loans, credit cards, retail cards, etc. Installment loans are loans that a person borrows once and makes payments until the balance is paid in full. Revolving credit are credit loans that have a revolving balance, with regular payments made. Each time a payment is made, more credit becomes again available for you to use.

Maintaining your credit is an area of your life that you cannot afford to disregard. On your mortgage alone, you can save tens of thousands of dollars on a thirty year fixed mortgage by having a fair credit scored over a poor one, or you can save even more with an exceptional credit score.

Bring mistakes to their attention

Bad credit is a bleeding wound in your financial affairs. It takes time to recover from a serious wound (or black mark on your credit history), so there’s no time like the present to facilitate healing. Unfortunately, even with all you’re doing to improve your credit score, the credit bureaus themselves can sometimes make a mistake on your credit report. If you see a mistake they’ve made, immediately call them on it. It helps to have mistakes removed from your report when you’re on the road to “Repair your credit!”

Credit Cards - A funny Animal

Welcome back to personalmoneystore.com’s payday loans money blog and Part II of this series on personal credit.

Yesterday, in Part I we touched on personal credit and how credit is scored by the credit bureaus who track our financial account information.

Today we will continue our discussion. I’ll talk first about the common misconception regarding building credit that often gets consumers into trouble. I’ll also cover the first steps we will need to take in obtaining our personal credit score.

Common Misconceptions About Building Credit

Credit is a funny animal, and to some degree it works contrary to what we as consumers would consider sensible.

Naturally, we have a tendency to think that if we have a credit card and we make purchases and pay the balance off in full each month, we would get a higher credit score ranking from the credit bureaus.

However, by paying off the entire balance in full each month, the credit bureaus don’t see you as really borrowing any money at all. But, if you pay off your balance in monthly installments, the credit bureaus see you as having a debt and making good on that debt. Therefore, they award you points toward your credit ranking.

It Costs To Have Good Credit

It’s ironic that the the process of establishing a good credit score is achieved through the irresponsible practice of obtaining debt and paying it off more slowly than what would be considered financially smart.

Nonetheless, don’t let this become a crutch. Some consumers fall into the trap of justifying large credit purchases on behalf of their pursuit to obtain that elusive credit score.

Many other things will be addressed throughout this series that will help you strategically build your credit without falling into financial snares that will leave you entrapped in debt.

Many of our customers borrow payday loans just to avoid the late payment penalties on debts they have accrued by making decisions with good intentions but bad financial planning. Don’t let that be you!

The End of the Road for Bad Credit

It's a Hard Road

At this point you may not even know if you have good credit or bad credit. Surely you have some assumptions. After all, nobody pays your bills but you, so you must ask yourself, “Have I been diligent about making my payments on time?”

If so, I would expect at least a fair credit rating, but really there is only one way to find out: obtaining a copy of your credit report.

Obtaining Your Credit Report

Obtaining your credit report is free the first time you request it each year. Each additional request, however, will cost you a little extra money, but the price is usually quite small and affordable.

You are entitled to one free credit report per year from each of the the three main credit bureaus. The first step to achieving or maintaining good credit is to download all three of your credit reports from each of the three main credit bureaus. One may report things about you or your credit history that may be inaccurate and will need to be addressed as soon as possible.

Once your credit is in good standing, you can download free reports from the bureaus individually. That means you can check your credit score every three months, allowing you to monitor your report for discrepancies without having to pay a dime.

To Be Continued…

That concludes Part II of our series on credit. Keep your eyes open for Part III on the payday loans money blog, where we will show you how to obtain your credit reports and understand them.

Credit repair takes a little time, but considering the effects it has on your financial opportunities, it is time well spent.

See you soon!

Building credit is more complicated than most people think. It's not simply a matter of paying your bills on time.

On PersonalMoneyStore.com’s payday loans money blog, we talk about a variety of financial topics and money-saving tips, tricks and strategies that help you stretch each of your hard-earned dollars the furthest.

We care about your financial welfare and want to equip you effectively to prosper financially.

That being said, today we are going to start a series on credit — undeniably the most important and least understood part of consumer financial education.

What is Credit?

Most consumers don’t realize the importance of credit or even what credit is. When most of us hear the term credit we think of all the plastic in our wallet that allows us to charge purchases for later payment.

Often times the term credit brings a mixture of both good and bad feelings because of the opportunity it provides us as well as the difficulties it can bring in light of the debt we as consumers tend to accumulate.

The Objective of this Series on Credit

For the duration of this series, however, we will be talking about credit in the terms of personal credit or credit score, or in other words the scoring index by which creditors judge our “credit worthiness” or ability to handle money effectively and responsibly.

How Credit Works

How credit works is complicated, but to get the ball rolling a little more quickly, let’s just throw out a quick description in layman terms.

Every time a consumer, such as yourself, applies for an account with a creditor — such as a bank, credit card company, retail store, auto loan, personal loan or even a home mortgage — the account is reported to each of the nations three main credit bureaus.

There are many factors which determine a good credit score.

What Creditors Track

The credit bureaus track the number of open accounts, closed accounts, account balances, credit inquiries and any history of late payments or collections that have been reported on your behalf. Through a complex algorithm unique to each of the bureaus, they assign you a numerical score.

The purpose of this credit scoring system is twofold. First, it helps protect creditors from fraudulent or irresponsible customer transactions on financed merchandise such as cars, furniture, appliances and anything else you would choose to finance with a credit card or a company’s in-house financing options.

Their are some exceptions to this rule, such as payday loans lenders. These companies typically don’t work with the credit bureaus, which makes them a good loan option for people with bad credit, but we will talk about that later in this series.

Secondly, and most importantly, credit scoring it set up to award those who are diligent and responsible with their financial resources and penalize those who are not.

The difficulty in obtaining a good credit score these days has become a little more cloudy and involves more than just paying your bills on time. For many this begs the question: Is the effort worth it? Or is having good credit really that important?

How Important Is It To Have Good Credit?

It can be easy to brush off the pursuit of good credit as unimportant, but today good credit has become a very important, integral part of every consumer’s personal and financial success. Your personal credit score has an effect on the following:

• How much you pay for car insurance
• How much you pay for house insurance
• How you pay for your personal health insurance
• How high your interest rate is on your home mortgage loan
• How high your interest rate is on auto or other personal loans
• The total credit amount you’re awarded with financed options or credit loans
• Your chances of employment

Almost every major financial transaction will consider your personal credit rating or credit score before awarding or denying you any contractual terms.

Credit and Employment

As mentioned above, more and more employers are running credit checks to validate the credit worthiness of new hires, as they believe it is the best indicator of a potential employee’s responsibility. Employers associate a good credit score with an employee’s diligence to come to work on time each day and fulfill the requirements of their job position.

The Value of Having Good Credit

You can’t put a price on good credit. Good credit saves you a fortune in unnecessary expenses over time that can be delegated to a retirement savings plan or college fund for the kids. Knowing how credit works and its effect on your financial endeavors will open doors that would otherwise stay shut. Short term credit needs are filled well by payday loans.

That concludes part one of this series on how credit works. Consider your personal credit and its limiting factors in your life and join us again tomorrow for part two.

See you then!

Posted courtesy of personalmoneystore.com, your payday loans source.