our credit is one of the most important issues in your personal financial life. Your credit score determines if you can get a loan, and how much a lender will give you. This includes mortgages, new and used car loans, student loans, credit cards, and even in-store financing.
As soon you begin financially interacting in the world, your credit score is established. The higher your score the better off you are. Scores range from 450-850. Over 690 is a good credit score and over 720 is an excellent credit score.
If you have excellent credit you can pretty much buy whatever you want. Obviously there are other factors including how much money you make versus how much you are currently paying in debt. This is known as your debt to equity ratio.
If your credit is fair or bad you will have a hard time getting a loan. If the lender does give you a loan you will be getting a much higher interest rate than people with good credit. When it comes to interest rates, every point counts. Imagine you and your buddy get a loan for the same 30-year mortgage for $100,000. You both make $75,000 a year. You have bad credit and he has excellent credit. If you get your loan you will most likely pay $734/month for it at 8%, and he will probably be paying $600/month for it at 6%. That means he is paying 18% less than you, just because he has good credit.
If you are young and you have just gotten your first credit card or car loan, you are now establishing your credit. If you pay your bills on time and never miss a payment you will build your credit score. If you start missing payments or defaulting on loans your score will go down.
Everyone can be a victim of identity theft. Most victims don't know their identity has been stolen until the collectors start calling or they are denied credit. To prevent this from happening you need to monitor your credit report. Sign up for a credit monitoring system, and lock your credit. This makes it impossible for credit to be granted in your name until a call to you has been made by a lender. They will ask you personal questions that must be answered correctly. A lot of services will insure you against losses in case the worst does happen. Many will also fix the negative effects that the theft has caused.
As soon you begin financially interacting in the world, your credit score is established. The higher your score the better off you are. Scores range from 450-850. Over 690 is a good credit score and over 720 is an excellent credit score.
If you have excellent credit you can pretty much buy whatever you want. Obviously there are other factors including how much money you make versus how much you are currently paying in debt. This is known as your debt to equity ratio.
If your credit is fair or bad you will have a hard time getting a loan. If the lender does give you a loan you will be getting a much higher interest rate than people with good credit. When it comes to interest rates, every point counts. Imagine you and your buddy get a loan for the same 30-year mortgage for $100,000. You both make $75,000 a year. You have bad credit and he has excellent credit. If you get your loan you will most likely pay $734/month for it at 8%, and he will probably be paying $600/month for it at 6%. That means he is paying 18% less than you, just because he has good credit.
If you are young and you have just gotten your first credit card or car loan, you are now establishing your credit. If you pay your bills on time and never miss a payment you will build your credit score. If you start missing payments or defaulting on loans your score will go down.
Everyone can be a victim of identity theft. Most victims don't know their identity has been stolen until the collectors start calling or they are denied credit. To prevent this from happening you need to monitor your credit report. Sign up for a credit monitoring system, and lock your credit. This makes it impossible for credit to be granted in your name until a call to you has been made by a lender. They will ask you personal questions that must be answered correctly. A lot of services will insure you against losses in case the worst does happen. Many will also fix the negative effects that the theft has caused.
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