As a consumer, one of the most important things you can do is educate yourself about your credit history. Knowing your credit score is a good place to start, but it’s only the first step. To truly master your credit, it’s important to review your full credit history, understand how it is determined, and take steps to improve it.
For example, here are five things you may not know about your credit, but should.
1. One Mistake Can Undo Years of Good Credit
The unfortunate reality of a credit report is that years of good credit can be damaged overnight. This can be due to one mistake such as a missed or late payment or defaulting on a loan.
It doesn’t have to be a credit card or a loan payment. Even missing a utility payment can appear on your credit report. That’s why it’s vitally important that you have a budget and pay your bills on time and in full.
2. Credit Card Companies Want You Back
Credit card companies and other lenders know when you’re emerging from bankruptcy, or when your credit lines are getting overextended. It’s at this time that you’ll see an influx of offers for credit cards and other unsecured loans.
The problem is that these offers are likely to be at higher interest rates. Because of this, the debt that you accumulate using these cards is likely to grow faster, which can lead you further into debt.
3. Credit Repair is a Myth
You may have received emails from companies that offer credit repair services. While these companies make big promises, they often do more harm than good. Credit repair services don’t address the root causes of your credit issues. Instead, most credit repair services simply dispute every item on your credit report.
This may provide you with a small, short-term bump in your credit score as these disputes are resolved, but afterwards, you will be penalized for the hard pulls on your credit report. Not only that, but with the payments to the credit repair service, you’ll have added hundreds of dollars to your personal debt.
4. Mistakes are Not Forever
Here’s some good news. You may have heard that a missed or late payment or bankruptcy can stay on your credit report for up to seven years. This is true. However, after the first two to three years, the impact of that hit begins to diminish. That means that even two years after a bankruptcy, options are available that can help you to rebuild your credit responsibly.
5. Options Are Available
For those who have gone through bankruptcy, there are options and steps that you can take to improve your credit score and build a stronger financial future. If you’re looking for insight, working with a certified credit counselor is a great place to start. They can help you to understand your options and navigate your way toward a stronger financial future.
If you’d like to learn more today, we invite you to take advantage of our credit analysis service. We can provide you with a detailed review of your credit report, a budget review, and a plan of action to improve your credit in a way that is effective and responsible.
