Credit – Your Current Situation, Part 2

By applying for credit or loans only when you actually need them, shopping around for the best deals you can qualify for, then paying your bills on time, you’ll stay in a much better financial situation and be able to protect your credit reputation and credit score. Even if you don’t need a mortgage, car loan, student loans, a home equity loan, or credit cards right now, consider what your needs will be three, five, or ten years down the road. The mistakes you make when managing your credit today (or the mistakes you’ve already made) will directly impact your ability to obtain credit in the future.

If you’re single, working full time, and enjoying the dating process, it’s hard to imagine that in a few years, you might want to settle down, buy a home, and start a family. This could mean that you’ll need a mortgage and perhaps a car loan. Maybe you’ll decide that before getting married that you want to go back to school to earn an advanced degree and will need student loans to pay for the education. By damaging your credit today, you run the real risk of not having the credit you’ll need available in the future. Unfortunately, a lack of credit could prevent you from realizing your personal and financial goals and dreams.

Although paying your bills on time and properly managing your credit will help you maintain a high credit score, unfortunately, there’s a long list of things that can negatively impact your credit score or keep you from being approved for a loan or having a credit card application approved. Just some of the potentially negative actions that people often take include:

o Having the amount owed on accounts be too high.

o Being delinquent on one or more accounts.

o Not allowing enough time to pass since your most recent account(s) were opened.

o The length of your revolving credit history is too short.

o Allowing the proportion of loan balances to total loan amounts become too high.

o Allowing the proportion of your balances to credit limits become too high on credit card (revolving) accounts.

o The time since one or more late payments is too short.

o The total amount owed on credit cards (revolving accounts) is too high.

o Causing negative information to appear in the Public Records section of your credit reports.

o Having too few bank revolving accounts (major charge cards as opposed to store credit cards).

o Having too few of your accounts show up as “Paid As Agreed” on your credit reports.

o Having too many accounts with balances.

o Having too many bank or national revolving accounts.

o Having too many consumer finance accounts (retail store credit cards).

o Having too many new accounts opened in the last 12 months.

o Having too many of your accounts show late payments.

o Having too many recent inquiries in the last 12 months.

o You have no recent revolving balances or not a well-established credit history.

o You have one or more accounts that have been turned over to collections or that have been charged off.

o You have too many 30-, 60-, 90- or 120-day past due accounts.

o You have too many revolving accounts (credit cards).

o Your account payment history is too new and the new creditors or lenders haven’t yet provided enough information to the credit reporting agencies.

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