To those who don’t know about it, there’s a force lurking behind your finances, governing the decisions you can and can’t make. It can open many doors for your future just as it can close. Credit is something to be taken seriously. It can do a lot of harm, but it can also do a tremendous amount of good when you know how to use it right.
Know what harms your score
Your credit report and credit score are a means of measuring how reliable you are in keeping up with payment agreements. There are a few obvious things that will harm them. Being late in payments, getting in debt, falling behind on rent are all big bad marks on your report. But there are some surprising things that can have a negative impact, as well. Credit rating systems will, for instance, penalize those who are self-employed, because they don’t get what could be considered a reliable paycheck. Even paying off loans before the agreed date can harm it. It’s just another way that credit providers see you as breaking an agreement. There’s a lot to learn about protecting your credit score.
Know what helps it
Because some of those negative marks can come from the most surprising of places, it’s a good idea to work to constantly improve your score, little by little. Naturally, paying loans and debts on time, keeping up with rent and bills, it will all reinforce a strong credit history. But you can get bonuses from making appropriate use of credit cards. The more you use and repay credit cards reliably, the better.
Why it matters
Your credit score and records matter because they are going to decide what kind of financial steps you can step. They will help you secure more kinds of loans and particularly those with better interest and repayment agreements that mean it costs less to repay a loan. Better credit means more long term control of your finances and more options for dealing with debt. Bad credit means you can have trouble finding loans at all or, if you do find loans, they come with heavy interest and heavier penalties for missing payments.
Capitalize on great credit
When you have a strong credit score, it can do more than offer you better deals, however. Those who provide credit like it when customers use it. They’re more than willing to reward them in the case of credit reward cards. Looking at cards like Cap One Venture vs Chase Sapphire Preferred and comparing them can help you find the cards you are applicable for and just what they offer. In most cases, what they offer is going to be points that translate to real spendable cash when you further use the credit card. So by keeping your credit healthy, you make those kinds of reward cards available, which means you can keep more purchasing power in the future.
The clever use of credit is going to ensure you’re always getting the best deal, always making the right reputation and even getting a little back in return. Just make sure you only ever use credit when you know you have the means to pay it back.