Credit has been just a little too easy to get for the Average American, you know, those wonderful folks who cannot balance a check book, punch a chad or even program their VCR? Amazing the old cliché; “Shop ’till you drop!” Well, consumerism is alive and well in America and now we find ourselves in a little bit of a pickle, you see with high gasoline prices and food costs, many American Families are charging their groceries and for this convenience they are paying some pretty steep interest rates.
This is very unfortunate because in reality they should be putting their money into long-term investments that could grow and double every 7.7 years. It’s just a travesty to see them pay all their money and future money to credit card companies that they have allowed themselves to be economically enslaved too. How did all this happen? Well, apparently consumers forgot the number one credit tip; Don’t Borrow Money Unless You Can Pay it Back!
Maybe, they had not thought much about it, but statistically the average American has 1.8 times their annual earning in short-term debt. This is credit cards, car loans and other types of loans, not including mortgages or long-term debt. Speaking of which we all know that the mortgage crisis is at critical levels, along with the credit card debt and unless folks get back to credit tip number one, and think about this as they continue to dig themselves a deeper hole to which there is no mistake, all bets are off. Please pray for the financially inept American Consumer for me.
Here are a few basic credit tips to help you maintain and improve your FICO scores and thereby open new opportunities in the future:
o First and foremost, pay your bills on time. It seems like common sense and realistically it is, but many people still seem to neglect this basic concept of credit maintenance. Your payment history is the most important single factor in your credit score; therefore, your first priority should be to make all of your payments on time. Remember that a late payment will continue to affect your credit score for the next seven years.
o Next, do everything possible to avoid defaulting on any debt. Although your payment the timeliness of payments is the most important factor in your payment history, defaulting on debt is also key element of this score. Do what you can to avoid defaulting on debt, even if this means making minimum payments or negotiating with your creditors. Often creditors are willing to work with you if you contact them and explain your situation.
o Regularly get copies of your credit reports from each of the “Big Three” credit reporting agencies – Equifax, Experian, and TransUnion – and review them carefully mistakes. Mistakes are quite common on credit reports and these mistakes can seriously impact your scores. By law you are entitled to a free copy of each of these credit reports, so take advantage of this. You can order your free reports online at www.annualcreditreport.com.
o Learn about your legal rights with respect to your credit scores. The federal government has a whole series of legislation that affords people legal rights with respect to their credit reports. Further, many states also have legislation that gives people even more rights. Learn about the rights you have under both federal and state legislation and use these rights to protect your credit scores. Many people do not even realize what rights they have under the law.
o Be wary of credit scams online. The Internet is full of different companies and independent operators making extravagant promises about what they can do to help your credit situation. Be wary of these claims. Realistically, outside of debt negotiation or debt consolidation lenders, there is little that others can do for you that you cannot do for yourself. If you are already facing financial hard times, online scams are the last thing you need.
These five simple credit tips to help you keep track of your credit scores and improve them should be the first steps taken by anyone worried about their credit scores.