There are lots of places that promise you
credit in minutes: department stores, online credit offers, car
dealerships-they all want your business and they will usually tack on
all sorts of special deals to entice their charge accounts. Some
department stores promise that when you use the store's credit card you
will get a discount off of your purchase. Online credit cards promise
special points and rebates and car dealerships, well they'd probably
promise to drive you to the moon if it would get you to buy a car from
them.
Unfortunately, as tempting as all of these
"credit in minutes" offers are, they can have an extremely adverse
affect on your credit score.
Your credit score is figured based upon a
number of factors: how much money you owe, how many accounts you have
open (this includes bank accounts, store accounts, credit card
accounts, various loans, etc), how many of those accounts are in good
standing, how often the accounts are used, what the payment history is
on those accounts and how old the accounts are. All of those numbers
are plugged into an algorithm and that algorithm determines your credit
score.
Your credit score is the number by which you
will be judged for the duration of your entire adult life. It sounds
drastic, but it is true. Every time you apply for, well,
anything-chances are high that your credit will be checked. Even phone
companies are checking your credit rating before agreeing to let you
sign up for phone service now. Employers are starting to run credit
checks at the same time that they run your background check. It is
imperative, therefore, that your credit score be as high as possible.
This means not falling for those "credit in minutes" promises that are
flung at you every time you leave the house.
In the event that you do decide to open a
line of credit, there are simple steps you can take to make sure that
you keep your credit score as high as possible.
The most obvious step you can take is to
always pay your bills on time! This is where most people falter. They
let the bills lapse and before they know it their credit account has
been turned over to a collection company. Paying your bills on time not
only assures that you won't have to deal with a collection company but
it could raise your score. The longer period of positive payment
history you have, the better for your credit. Another step you can take
is to close accounts that you haven't used in over a year. All you
really need besides your bank account is one credit card (or maybe two)
for emergencies. After all, the best way to avoid debt is to not spend
money you don't have, right?
Those "credit in minutes" offers can be very
tempting especially for people who do not have much experience with
credit. Unfortunately "credit in minutes" is only good for the
immediate situation, not for your long-term financial future.
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Credit in Minutes Tip #1
Stay
on top of your credit report. Most credit reports contain errors. Make
sure you check your credit report every year (you get one free credit
report every twelve months) and if there are errors make sure to
challenge them with the reporting credit agency. Credit agencies are
required to investigate each and every challenge that gets reported.
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Credit in Minutes Tip #2
Just
because you qualify for all of those credit cards does not mean you
should get them. A person with too many credit cards looks sketchy in
the eyes of a potential creditor. Think of it this way: if a person is
financially stable does he or she need ten different credit cards?
Wouldn’t just one or two suffice?
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Credit in Minutes Tip #3
The
best way to raise your credit score is to make all of your payments on
time. It sounds too simple to be true, but that’s all there
really is to it. Staying out of debt and/or making all of your debt
payments on time will keep your score up where it should be.
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