Credit cards. You can get your first one when you’re just 18, and they do have a certain allure. Don’t have the cash right now? That’s okay; if you charge it, you can pay it later when you do have the cash! And it’s a financial safety net, too, right? You can fall back on your card if you have a medical emergency or need to get a sudden car repair, and you can pay in installments rather than having to try and come up with the full amount in one shot!
All of these seem like good reasons to have a credit card, like, yesterday. And you would be right, except for the insidious fact that having open lines of credit lulls you into a false sense of security. When you sign up for a credit card, even just the act of doing so has an impact on a very important number: your credit score.
This mystical number has a lot of myth and legend associated with it. You may hear the phrase, “You need good credit in order to…” followed by some variant of purchase a house, rent an apartment, or finance a car. Less common are mentions of starting a small business or getting any sort of personal loan. What they are referring to is your credit score, and they are right; it does need to be good in order to make these kinds financial decisions.
Credit scores are affected by a multitude of factors, all which add together to give you your final number. Maintaining these numbers in a positive light is a complex and sometimes frustrating dance of balance. A certain percentage of these factors goes toes towards your total credit score, and these factors include:
Even if you don’t use your open lines of credit, having them sitting there collecting dust is bad. The reason for this, is that it costs the lender money to keep that credit line open for you and they may close it due to inactivity. A closed account negatively impacts your credit score every time. Not to mention, some cards have annual fees, and those can catch you unawares if you happen to forget about them.
What’s to be done, though, if you’ve managed to mess the whole thing up? That’s where a company like creditrepairnerds.com comes in. They can help you resolve these issues, clean up your score, maintain your credit lines, And help you get on your way towards whatever credit goal you have: a house, a car, or just paying off some bills. The most important thing to remember is not to leave it go. Taking action is the only option in order to repair your credit score, because it will not and cannot repair itself.
Posted on 08/05/2013 at 12:00 AM