Help Others You Love Become Credit Worthy

Because nearly everyone starting out uses credit to buy a car, home or pay for school, credit scores are a crucial piece of your financial life. And while most people dislike debt, you will likely use it. Which means you should manage it well.

Almost everything you do with money affects your credit score. If you are in the market for a home or car and cannot pay with cash, you need to be approved for a line of credit. Your credit score shows lenders how likely you are to pay debt back in a timely manner.

A good credit score will save you thousands of dollars. Having a healthy credit score allows you to qualify for lower interest rates. With a low credit score your mortgage rate may be 5-6% where as a high credit score could get your rate as low as 2-3%.

Even if you are not ready to purchase a home quit yet, your credit score is still very important. Many apartment communities use your credit score to decide your security deposit and other fees. Also, insurance companies look at your credit score when quoting you for renters, auto or home insurance.

Make sure those you love do these 5 things to improve their credit score (in order or importance) and be more credit worthy:

1. Use a credit card to establish a payment history. Even if you don’t need the credit, using a card and repaying it monthly (this is crucial) shows that you are credit worthy. If you sent your child to daycare you want to know they are in good hands. Creditors use this same method with lending. By making your payments on time, and paying more than the monthly minimum you will build your credit.
2.  Never use more than 30% of the credit limit of your card. Even if you pay your card off each month if your credit score is calculated in the middle of the month they will see the high usage. When placing bills, and groceries on your credit card we all want that 1% cash back or air mileage but it is not worth risking your next big purchase.
3.  Keep a no-fee credit card open but don’t use it. This will allow you to have a “length of credit” history … making you more credit worthy
4.  Use more than one credit line but not too many. Creditors like to see that you have a couple of different cards or lines of credit but not too many. Best practice is to eliminate as much debt as possible.
5.  Space adding new credit over time. When helping your child or grandchild establish a credit history start slowly and space out when you take out new forms of debt and credit lines.

Credit scores are a controlling factor in your financial picture. Stay up to date on which factors are harming your credit score right now. Credit Karma and Savage Money are great free sources to track your credit score. These sites allow you to view which factors are hurting your score. They also provide tips to move forward with improving your credit score. Do not let your credit/debt destroy your credit score. Global View would be happy to help you, your children, and grandchildren gather a greater understanding of your credit scores and provide an action plan to eliminate any outstanding debt so you will be Worry Free!