Monday, December 28, 2020

On December 28, 2020 by Decadeofhits   No comments

Bad credit can have a negative effect on a number of things, from not being able to get loans, to having to much more expensive insurance premiums. On the other hand, having a good credit score can give you the opportunity to secure low interest loans and credit cards with higher limits.

What is Credit?

Credit is the ability to buy now and pay later. For most of us, our first bills are going to be credit cards, but no matter how affordable a car is, it will not be able to afford that $60,000 sports car if you keep spending more than you earn. When you make payments on a credit card, on the other hand, creditors are making a lot of money off of you instead of you making money off of them. The money that you spend on your credit card and are not paying in the meantime can quickly add up.

Benefits of Good Credit

Loans for whatever you desire are a great thing. If you have a fund for a down payment on a car, then you will already have a huge advantage. A car loan can be secure. Other items may require larger down payments, but at least you will not have to wait a year for the item you want. With a large down payment, you will have more money to put toward the product you want and be able to take full advantage of any savings.

Don't let bad credit ruin your life. If you want to get something really "big" like a house, make sure you have good credit. Home ownership may take a few more years, sometimes as much as five years if you have the right credit score, but it will go a long way toward making your first purchase much easier.  Owning your own home may also lower your taxes, because property taxes are based on the value of the house considering it to the value of the mortgage of it. Owning your own home also allows you to "invest" in something that is usually wealthiest, because your profits go much further.

Mistakes Not to Make

If you have too many credit cards, do not get over them. It is not a good idea to have 50-60 of them, or more. You may think that you are being smart by spreading them out, but credit cards are not really a good idea when you have lots and lots of them. You can easily lose track of the money you spend, resulting in all of the debt you can make. Pay everything off on time and in full and it will still allow you to have a great credit score.

If you find that you owe too many debts, do not make payments either. Pay off what you owe and stay on track. It is important not to have too many open accounts, as having too many accounts can actually hurt your credit score. It sure would be cool to need 600 of $10,000 to keep up with payments and pay down the debts. Make sure that you keep just a couple of credit cards for personal use and try to pay the balance off each month.


Post a Comment