A good credit score can unlock many possibilities in your life, making it easier for you to secure a loan, rent an apartment, or start a business. However, according to a recent survey conducted by LendEDU, about 25 percent of millennials do not know what a credit score is. A total of 500 people aged 17 to 37 participated in the poll, which tested their credit score knowledge.
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Are you struggling with your credit rating? Perhaps it’s too low and needs fixing? Then have a read of this advice to help repair your credit:
Reduce Debt
One of the main reasons that your credit rating is so low is because you’re in debt. Debt is the cause of so many financial problems. So, if debt makes your credit rating bad, surely no debt makes it good, right? Yes, that is exactly right, you need to get out of debt. Or, at the very least, try and reduce some of the debt you have. Get to work on paying off your debt, try and get rid of as much as possible. Stop using your credit card so you don’t end up in even more debt. Focus on reducing what you owe and your credit rating will soon improve.
Poor credit is practically an epidemic, thanks to the “keeping up with the Joneses” mentality that pervades our culture. Pair that with the fact that there is no mandatory instruction in basic finance in school and you can easily see how so many people get in over their heads where credit is concerned. The good news is that you don’t have to let a few bad decisions saddle you with bad credit for the rest of your life. There are ways to get back in the black and rebuild your credit, no matter how low your rating has dropped. Here are a few simple strategies to consider.
Find out what you’re working with. The first step to rebuilding your credit is finding out what your score is and what infractions you need to clear up in order to being the rebuilding process. This means ordering your free credit score online. Once you can see black marks, you can start to address the worst of your credit issues in order to repair your credit. You might even find some instances of wrongful reporting (if, for example, you’ve paid off a debt and it’s still showing up as being in collections). Keep in mind that some old debt is good, such as regular mortgage payments, so you might not want to remove it. But black marks and credit card debt should definitely be addressed as quickly as possible.
Even if your business is virtually a one-man band (which is to say, you are self-employed), it’s not a bad idea to establish a separate business entity, such as an LLC, an S-corporation, a C-corporation, or some other type of company as a way to avoid added taxation, limit liability, and protect your personal assets. And one of the greatest benefits you’ll gain along the way is the option to start building credit under your legal company name. You might not think it is terribly important to separate your personal credit score from your business credit rating. But what if you have to file bankruptcy personally, just for example? What if your business faces a liability lawsuit? You don’t want your business to get dragged down with you, or vice versa. The point is that building and maintaining business credit is important. Here are a few reasons why you need to establish good credit for your company.
For one thing, a separate credit identity can help to lend credibility to your business. If, at some point, you’re seeking lenders, investors, or partners, having a solid credit history established on behalf of your business can legitimize it to other business interests, improving your prospects. Even vendors along your supply chain may be more likely to do business with you when your credit is in good standing. And creditors will certainly look more favorably on the prospect of offering your business lines of credit when you’ve shown a proven ability to pay in a timely manner, building and maintaining your professional credit score along the way.
If you want to purchase a house or car someday, one thing that you’re going to need to have is good credit. That is what sends a message to your potential loaners or creditors that you are responsible with money – that you pay your bills on time.
If you’ve made a few credit mistakes in the past and you’re curious to know about some of the things that you should do in order to establish your credit and also keep it intact, here are five tips that can help you to do just that.
Get a secured credit card. If you don’t have a credit card, there are some benefits to that. The main one being that since credit cards are basically plastic cards that come with interest, if you purchase things with cash, you decrease your chances of going into debt. So, what is the advantage of having a credit card? Well, one of the main ones is the fact that it’s one of the most effective ways to establish credit. That said, one card that you can get that will help you to use credit responsibly is a secured credit card. Being that it’s tied to your account and it has a lower limit, that will essentially help you to pay your balance on time.