fbpx

Why Good Credit Matters and Steps to Build It

cincb-article-creditmatters.jpg

Credit is a necessary tool for people to be able buy goods and services. More and more businesses are realizing that your credit history should be used to make decisions about extending goods or services to you not only for credit card and mortgage decisions. 

Since your credit history is defined by how you have paid (or not paid) your bills in the past, many businesses – landlords, mortgage lenders, utility providers, and even employers – use your credit to predict your future financial responsibility.

Here are a few ways credit factors into your life:

    • Shelter – For homebuyers, mortgage lenders want to know that you won’t default on your mortgage. Without good credit, the lender will consider approving a mortgage loan as too risky. You’ll pay higher costs for borrowing, or even be denied. For renters, your credit tells landlords whether or not you are a trustworthy person. Will you pay your lease on time as agreed? Will you maintain their property to preserve its value? Bad credit leads to denials because the landlord may consider you high-risk.
    • Transportation – If you need a car to get around, chances are you’ll need a car loan. With good credit, lenders offer you more credit at competitive rates. Otherwise, you’ll pay a little more and get a lower credit line. Plus, your credit could impact your relationship with insurers.
    • Employment – Even your opportunities for work can be hindered by bad credit. Employers are cautious when screening prospective employees. Most companies conduct credit checks as a part of the hiring process to assess how risky you are as a potential hire.
    • Entrepreneurship – Starting your own business? Credit matters too. Most startups require a significant amount of cash that you might not have available. Small business loans require good credit to qualify.
    • Utility Services – Surprised? It’s true. Even your electricity company considers that you are borrowing one month of electric service. So, before turning on your electricity, the company will check your credit. This applies to most utility services including cable, telephone, water, and even cellular services. Good credit can help you avoid paying hefty deposits.  

So as you can see, anytime you need to borrow money, or even partake in basic services, your credit is called into question. This is why maintaining good credit is so important. Now, you’re probably thinking, “how do I establish good credit?” Excellent question! Here’s a quick and easy process that you can start following right now.

5 Ways To Build a Good Credit History

Getting credit when you don’t have any can be intimidating. But once you have the information to build good credit then you are halfway there.Everything you do that involves credit becomes part of your credit history. To have a good credit history, you have to use credit responsibly. Using credit responsibly means that you:

  1. Charge only what you can afford to pay – Make this a habit in your life. Borrowing money or obtaining new credit will become easier. As well, this helps you avoid getting into serious debt trouble.
  2. Start with only one line of credit – Many first-time consumers accumulate credit cards or other similar types of charge accounts within the first few years of using credit. Don’t do this. The more credit you have, the more you’ll end up using.
  3. Pay on time – Always pay on time whenever possible. A large part of your worthiness is based on the timeliness of your payments, paying your balances on time improves your credit. Creditors want to see that you’re capable of paying bills as agreed.
  4. Pay as agreed – If you have a credit card, pay at least the minimum balance every month. If you have a charge account that requires full payment at the end of the month, pay the full balance at the end of the month. If you have a loan, pay the agreed upon monthly payment. Wherever possible pay more than you agreed to because this saves you money.
  5. Use only a small amount of the credit you have – Maxing out your credit lines is one of the most irresponsible ways of using credit. Chances are that you can’t afford to pay off a maxed out credit line.  Staying below 50% of your credit limit is wise, below 30% is best.

By following these 5 principles, you will find it much easier to get credit in the future. Best of all, you’ll get more credit faster and at more competitive rates that will save you in the long run. Ready to take control of your credit? CINCB can help. Get your credit report and rating today from CINCB! Want to check your credit report right now? You can easily and securely order your credit report online, with quick turnaround (usually 24 hours or less). You can get your credit report here – Get My Credit Report.

CINCB has been established since 2002 to provide debt collection and credit reporting services. CINCB serves over 260 creditors locally and internationally with a local team of highly experienced agents ready to serve you.  Services are delivered fully online at www.CINCB.ky.  Contact us today to find out more.


Leave a Reply

Your email address will not be published. Required fields are marked *


error: Content is Copyright protected by law. For reprints or sourcing, please contact Cayman Islands National Credit Bureau, Ltd. Thank you.