It has always been ingrained in me that you need good credit-history. I used to ask my dad "Why does my credit have to be good?" "Why can't I just pay in Cash?" He told me, you need to establish a credit-rating so that it would show on my credit bureau report. That is when I decided to get my first creditcard. I was a student and was reluctant to use the card initially, later on when there was cash crunch I started using it. Over the years, my balance grew and grew. I found myself with a huge chunk to pay off post-education. Paying minimum dues was never enough and I was not aware of this. Later on my dad cleared the major portion of the bill.
Recently, Obama administration passed a bill on Credit Card Accountability, Responsibility, and Disclosure Act of 2009. It restricted signing up for a creditcard until you are 21 years of age or you have a spouse or a guardian co-signing for you.
Maintaining Good Credit
Credit scores reflect the long-term pattern of credit use and repayment history. The scores improve as your overall credit picture gets better. The best way to maintain a good credit history is by following a few tips given below.
– Always pay your bills on time.
– Keep creditcard balances low.
– Periodically check for any inaccuracies in your credit-report.
– If there are any inaccuracies correct them in all the three national credit-bureaus. Never let the errors be fixed by the credit-fixing agencies.
– Reduce the number of times the creditors are given permission to check your credit records. Such checks are known as "inquiries." It can blemish your record.
Remember the credit-scores are not going to remain the same forever. You can repair them by clearing off the credit and other loans on time.
Benefits of Good Credit
– Easy to avail loan at lower rate of interest – When you have a good credit history, the lenders including the banks will not hesitate to process your loan request. A glance at your credit-report will let them know whether you are reliable borrower or not.
– Processing is faster- A good credit-record means your loans will be processed faster and some financial institution may even waive off the processing charges.
– Better Chance of Employment-One of the scales on which your employers will assess you is your credit-record. When they check your financial background, if they see your credit-report is showing positive signs, they will know you are a responsible and reliable person.
– Bad credit means a struggle – If your credits are not doing good, it will become difficult to make the ends meet. You would have to pay exorbitant interest rate which makes it impossible to close your bank accounts. If you opt for credit-transfers, it will pave way to a vicious credit cycle. A good credit-history means you are free from such hassles.