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.

Commercialism is everywhere, and one can’t seem to survive without being expected to run up credit card debt. It’s the “gotta have it now” syndrome, and it is ruining your health. Think you are immune to this syndrome? Let me ask you: do you have at least one credit card? Are you depending on payday loans to get you through the month each month? Well, I am afraid to tell you—you have the syndrome and it is going to eventually wear you down due to lack of sleep and an abundance of worry about your finances. Following are budget busters that will ruin your credit every single time.

What are budget busters? These are the things that are advertised on every single television and radio station…on every single website…and in every single magazine. It’s those items that are “hot”, “new”, and “different”. Those items that you see everyone buying these days without understanding why they would buy them, and how they can afford them. Things such as Blackberries, 3G cell phones, or the latest television technology. You know the type—hot one day, and in the trash the next. But these “gotta have it now” items are what makes you throw caution to the wind and create huge credit card debts. These are the items I call “Budget Busters”, because they bust your budget in a big way. Some examples of these budget busters…

Real Estate

Investing in real estate is a good thing if you do it correctly, but unfortunately, not many people do it correctly. Have you ever watched some of the real estate buying shows on HGTV? If you have, then you know what I am talking about. Many of those people on the shows appear to be very greedy—they want all of their wishes to be met, and if even one thing is missing, then they keep searching. Often, their searches lead them to the very top of their budget, and some actually go over their budget just to get every item on their wishlist. Credit cards become the new type of cash for many of these couples.

Examples of this include several young couples, or even single people, who buy three or four bedroom houses with a two car attached garage in an up and coming neighborhood, and you know they are going to be sacrificing a lot just to get this big of a house. Why are they buying such a big house when they are just starting out? Whatever happened to the “starter house” that many young couples bought many years ago? Starter houses were just that—a house to get them started on the path of home ownership, and a way to get their feet wet on learning to make wise real estate decisions. Budget savers would actually go for a starter house that has maybe two bedrooms, and a bathroom, with no garage. This is budget busting at its most extravagant.

Auto

New cars, while they smell great and run great, they depreciate by half in the first year. Buying a new car is the worst budget buster you can make, because you will never be able to get that much money back when you either try to sell it or trade it in for a new vehicle. Buy a used car that is a few years old, and you will save a lot of money this way.

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By avoiding these budget busters, you will not only be able to cut out your credit cards, but you will also be able to save money for your future retirement. It’s worth it to settle for less until you are able to get what you want.