About Credit Management and Repair
Effectively managing your credit history and growing your creditworthiness has extensive benefits throughout your financial life.
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Make sure to have healthy credit habits and only use credit that you’re able to cover financially. |
Always review your credit history to see if you’re improving or to take action to repair it if necessary. |
Why is Credit Management so important?
Working to have a healthy relationship with credit can open up new leveraged financial positions.
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It can help you purchase assets Whether it’s a home to live in and build wealth or getting the best car loans out there, having good credit will reduce your payments that can be used for other asset growth. |
Gives you access to capital If your objective is to start or grow your existing business, having a good personal credit history helps to get you the best business loans and lines of credit possible. |
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You can get the best rates As your credit history gets stronger, you’ll be able to go shopping for rates when looking to purchase a home or some other large loan needs. |
Access to multiple loan types. Whatever your needs are for getting a loan, with a great credit score and history, all the options will be available to you, whether fixed, variable, collateralized and so on. |
What happens when you don’t have good credit?
Here we’ll see the opposite side and when you end up having poor credit.
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Living paycheck to paycheck If you have no credit to help you grow your liquidity, or if you only have high-interest credit cards, then you’re going to be spending each paycheck on the bills. |
No way to leverage expansion You won’t be able to grow your business with the financing needed for that big order, and it becomes harder for you to obtain mortgages. |
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You’re paying a premium for everything. The cost of money is the highest for you since you don’t have established or good credit. So you’ll always have the highest interest rates and most minor loan options. |
No way to build generational wealth Without the possibility of getting a mortgage or saving money on the cost of credit, you won’t be able to grow wealth with your family. |
How to grow or repair your credit
Keeping the correct type of discipline helps to ensure you’re growing healthy credit over time.
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Start Small Always have minimal credit that you can pay off every month quickly. Use savings to pay off high-interest credit. |
Shop for Credit As your credit grows, keep shopping for the best rates to maintain the journey of lower costs for the credit. |
Pay attention Don’t let credit spiral out of control. It’s a long and difficult process to repair credit, so always work with your creditors for alternatives. |
FAQ
Is building credit important?
Yes, it’s essential. You need it to build and grow wealth when applying to rent apartments or obtaining mortgages, and it can even be necessary for employment in some industries.
What happens if my credit falls?
Always run your annual credit report and confirm that everything makes sense and you aren’t a victim of fraud. For instance, if you notice your credit score is falling, see what’s the reason, if it’s missed payments, too much debt, or overutilization of total credit.
What happens if I ignore my credit obligations?
You could still perhaps be liable for the debt, and it will default and actually increase the amounts you owe, putting you in an unfavorable financial position.