Not so long ago people paid for goods and services with cash. They may have had a store credit, a lay-away, or a mortgage on a home, but essential living was done with cash up front. Things have apparently changed. Now we have mortgages, car loans, store credit cards, bank credit cards, student loans, EZ pay plans for furniture, electronics, and the list goes on and on.
There are more ways to go in debt than you can list, and yet, you are held accountable for how you manage and earn credit. That tool for accountability is called your credit report. That credit report is used to determine what you might qualify for on some of your biggest purchases. What can you do to develop good credit?
Developing your credit involves borrowing a little and paying it off over time. When you have no credit all you have to start somewhere, so look for small credit cards or opportunities to purchase on reportable credit accounts. Reportable matters. If it is on a small, in-store account and it is not a reported to the major credit agencies, then your work at paying this won’t matter. Keep these small accounts open, so they provide a history of your payments and payoffs.
Make your payments
Seems simple, but it matters. Regularly made payments matters as much as anything. Late payments will drive down your credit report points in significant ways. It is vital that you make your minimum payments on time if you do nothing else. Choosing how you use your cards, so they are a benefit to you and not a drain on your purchasing power is critical. Leave yourself the room in your budget to pay off what you can.
Keep those balances low
You might have considerable room on your cards, and it is best that way. Do your best to maintain low balances while not completely paying off the total balance. Maintaining a small balance will allow you to make low monthly payments on a regular basis, easing your monthly net output, but still making regular payments.
Maintain your credit report
Manage your credit report like you would any important report. Clear off expired accounts, engage with miss reported information, clear off any outdated information. The more you keep your report up to date, the more accurately and the more powerfully your report will work for you.
Bankruptcy is a last ditch, no other options solution that will wreck your credit for seven years. Though your credit may be poor because of late payments or missed payment, nothing will be so long term detrimental as that bankruptcy. Bankruptcy will impact your ability to purchase cars, homes, and most other major purchases. You will be hit with higher interest rates for years to come, so avoid this at all costs.