Oh, the joys of consumer credit, at times it seems so unimportant, yet it is of major importance to each of our lives. Most people do not think of what their credit really means. That is likely one of the biggest issues so many face today in our economy.
Your consumer credit is not just how high your credit score is. The credit score is determined by the actions you take every day financially. All three of the major credit reporting agencies determine your score using different information. Good consumer credit ratings can secure a person’s financial wellness, while a lower score will cause stress and many challenges.
When we pay our bills on time, keep a zero balance on credit cards and make sure your loan payments are made on time or ahead of time, our consumer credit shows that we are trustworthy. That behavior is a sign of self-discipline. This group of people will likely think about decisions rather than just rushing into a financial decision. Questions such as:
Is this new credit card needed?
What is the interest rate?
Do I really need to purchase this new item?
will allow a person to determine if they really need to move forward on this choice of purchase. They will likely decide that they are better saving up more spendable funds first. This could very well be the difference between a good score and a low credit score. Some advantages of having good consumer credit would be lower interest rates, delayed payments and other financing options that are advantageous to the person.
Consumer credit is credit given to consumers for the purchase of items or a service. In turn, consumer credit becomes very important in the economy. A person’s ability to obtain loans or credit allows an economy to function efficiently and ensures economic growth.
A credit score is also more than just loans. Your credit score is shaped by your responsibility to pay your bills. Creditors such as landlords and insurance agencies can look at your scores to determine what your insurance premiums will be, or if you are a trustworthy tenant. If you are like millions of others, you need to fix a few aspects of your credit. To do that, one must start at the beginning. There is no magic method when it comes to upping your score.
First, request a copy of your credit report. If there are any questionable or inaccurate accounts listed, then you need to contact the creditor. Discuss with them the issue you are seeing. If it is inaccurate or incomplete, they have to fix or delete the account. However, you must understand that it takes time to correct any and all negative information on your credit file.
It is possible to rebuild your credit. Bills must be paid on time, aggressively pay down all delinquent accounts, and do not take on any new debt. This means no new credit cards and no loans for a vehicle or appliance. If you determine that you may need some assistance, you should contact a reputable consumer counseling agency. There are a couple of ways to be confident in the agency. If they ask for any fees upfront or tell you to dispute any accurate accounts on your file, run away very quickly! These are scam agencies that will only create more stress and problems in your life.
There are different types of consumer credit to be aware of. There are non-installment loans.
These are the simplest form for many. They are short term, less than 30 days. The second would be Installment credit. These would be loans such as vehicle loans where you pay a certain amount each month, with interest. The third type is a revolving open-end credit. These are a type from a bank where it is instant type credit when you need it. There is still interest payable on this advance.
When you are looking to establish credit, you need a seven-year period of some form of credit history. This could be a store credit card, utilities, student loan or something along these lines. The benefits of good credit are many. You would have instant access to funds in an emergency, such as a vehicle repair or a new appliance for your home. With some credit cards, you can earn miles or points. These points or miles may earn you a free vacation or a percentage off a purchase.
The disadvantages of trying to establish credit are great also. Obtaining a new credit card or other forms of credit tends to give the temptation to overspend. Credit is oftentimes used foolishly due to natural human impulses. Another fact to remember is that for lower credit ratings, the interest on cards and loans, whether short term or long, is always higher.
Some analytic advisors say that consumer credit does continue to expand and that it will stay steady and survive through the next recession. Consumer credit soared to the highest it had been since 2017. This shows that more people are realizing how important it is to maintain credit positively. No longer is the majority jumping in, now they are contemplating and weighing the odds before they accept another card, or rush to get the newest style vehicle.
Will Rogers said it truthfully long ago, “Too many people spend money that they have not earned, to buy things that they do not want, just to impress people they do not like.” That says it all, if the purchase is a want and not a need, then leave it be. That money you spend so much of your life working for needs to work for you. Spend wisely and it will be there to help you in the future. Being an optimist about your credit will serve you well, you will begin to see the opportunity rather than the difficulty of good consumer credit. Be steady in the goals for paying down debt, and frugal about spending on wants rather than needs. Your success in obtaining good consumer credit is no accident, it begins with hard work.