Your credit score is important for so many reasons.
Many people don’t know how essential a solid credit score is for so many areas of their lives. While most people are aware that you need a good credit score to secure a home loan, lots of people don’t realize that their credit score impacts a whole host of other things, including their ability to land a job or qualify to rent an apartment. At Core Global Credit Solutions, we’re dedicated to helping people improve their credit scores, but before we get started, here are the top five things you should know about credit scores.
#1. You have to use credit to build credit.
Lots of people are under the misconception that, if they’ve never used a credit card or had a loan, they have a perfect credit score. However, that’s just not the case. If you’ve never used credit, you don’t have a good credit score. Avoiding a credit card for the rest of your life is not the way to go. Instead, focus on building credit responsibly, little by little, over time.
#2. You actually have multiple credit scores.
When someone refers to a credit score, they often refer to it as if it’s one number, but the reality is that everyone has multiple credit scores. Your FICO score is probably the one used most commonly, but you also have a VantageScore, which is created by the top three credit bureaus — TransUnion, Experian and Equifax.
#3. You should monitor your credit report.
Your credit score is calculated by an algorithm to determine how risky it is to lend to you, but you can learn about what goes into your credit score by reading your credit report. It’s important to note, though, that the information in your credit report is not set in stone, nor is it always accurate. Monitoring your credit report will help you stay on top of any mistakes or inaccuracies that could be pulling your credit score down.
#4. You can hurt your score by closing old accounts.
No one wants to get caught up in the cycle of debt, and many people end up closing their old credit cards and lines of credit so that they aren’t tempted to spend more money than they actually have. While it’s a positive thing to know yourself and to stomp out temptations, you may be inadvertently hurting your credit score if you close your older accounts.
#5. You shouldn’t think of credit as a cash substitute.
It’s all too easy to end up with more debt than you can afford, and many Americans have found themselves in this boat in recent years. In fact, the average American household has more than $15,000 in credit card debt. The reality is that a credit balance is not the same as cash, and just because you have an available balance on your credit card, it does not mean that you can afford a particular item.
We hope that this blog has shed some light on credit scores and the importance of good credit. If your credit score is not what you’d like it to be, we can help you find the credit solution you need in Houston. Contact us today to get started.