All About Credit

What is it & Why is it important?

Credit is your financial history. It is important because it is rated. Your credit is assigned a numeric value, your credit score, which determines your credibility, and your eligibility for obtaining some of your life goals (i.e. owning a home, or getting a specific job).

What’s your Credit Score?

It is a three-digit number between approximately 450 and 850. Your credit score determines how likely you are to pay back your debt. The higher your score the better your credit. To determine your credit score you may come to GHS and review your credit report for free.

Factors that determine your score

• Your credit score is based on the following factors:
• Payment history: Timelines of payments, late payments are obviously negative
• Total debt: What is your total credit limit? How much more capacity do you have? · Credit History: How long ago did you establish credit? 
• Credit Assortment: Do you have a variety of credit (store credit cards, major credit cards, gas credit cards)? Open credit lines VS. closed credit. 

Who is your credit important to?

Financial institutions, Mortgage companies, landlords, credit card companies, even insurance companies and employers may be interested in your credit score. This is because they want to know if you have a good credit history, and if you are a reliable debt-paying member of society.

So this affects me how?

Again, without a decent credit score Credit Unions, Banks, landlords, Mortgage companies, and Credit Card companies will not want to offer you their services. You may be turned down for a place to live, an insurance policy, you may be passed up for a job and you might not be able to get a cell phone.

How to Build Good Credit

• Open a checking/savings account to establish financial history 
• Obtain a credit card and begin establishing credit. 
• A variety of credit is good, such as owning a major credit card, education loans, store credit cards, and a gas credit cards but don’t have too many. 
• ALWAYS pay your bills on time, always. One missed payment can damage your credit score. 
• Pay at least the minimum but try to pay more 
• Keep track of what you owe and what you have paid

How to Maintain a Good Credit Score 

• Pay your bills on time 
• Always pay at least the minimum balance
• Do not max out your cards, keep your balance at less than 30% of your limit 
• Budget your money

Helpful Links:

How to build credit:

http://articles.moneycentral.msn.com/CollegeAndFamily/MoneyInYOur20s/9waysToBuil

Maintaining good credit:

http://articles.moneycentral.msn.com/CollegeAndFamily/MoneyInYour20s/9waysToBuildAKillerCreditScore.aspx