5 Things You Need to Know About Credit

5 Things You Need to Know About Credit

Even though credit plays an extremely important role in our everyday lives, there are still many misconceptions about credit and gaps in consumer knowledge about credit. However, if you do not know certain important facts about credit and your credit score, you can find yourself facing difficulty buying a home, purchasing a car, or even renting an apartment.

  1. Credit means more than a credit card – When you think of credit, you may think of your Visa or Discover card that allows you to purchase now and pay later. However, your credit profile is so much more than that. “Credit” refers to all of the accounts that you have ever had, including student loans, credit cards, mortgages, and more. It can also include legal judgments, liens, and collection accounts against you. All of this is factored into determining your credit score.
  1. There are three different credit bureaus – TransUnion, Equifax, and Experian all have different credit scores for you since each credit bureau gets its own information. Lenders can decide which scores they can use to determine whether you are creditworthy, so it is critical to pay attention to all three.
  1. You can repair a poor score – Many people think there is no hope once you make credit errors and your score drops significantly. While rebuilding your credit score does take more time than lowering it, there are many ways to go about repairing a less-than-stellar credit score. Working with your creditors, paying your accounts, and lowering your debt will all help to raise your score.
  1. Carefully choose your credit accounts – Before you sign up for a credit card or loan, be sure you fully understand all of the terms of the account, including the interest rate, credit limits, fees, and more. Too many people sign up for accounts without understanding the terms and get in over their heads.
  1. Discipline is the key to a good credit score – Simply put, being disciplined and responsible when it comes to your finances is the answer to having good credit. Budget, pay your debts on time, avoid having large credit balances, avoid constantly applying for new cards, and do not spend more than you can afford, and your credit should be positive.

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At Central Mercantile Collection Services, we understand that consumers and businesses do not always pay their debts. If you need any type of debt collection assistance, call CMCS for a free consultation today.