Build Your Credit with Caution

Building credit can be a very exciting thing. Avenues of great opportunities are available if you do it right. It is important to avoid scammers that claim to offer you a debt solution in little or no time at all. Many scammers on the market today are taking advantage of people in disarray. Do not become the next sucker. Any company that does not advise you of your rights or else let’s you know upfront before continuing that most of your credit issues can be dealt with on your own, is probably a fraud. Under the Federal Laws, many of the companies are prohibited in many areas and often a lot of them work out illegal arrangements just to get ahead. There is however, legit companies and organizations that can help you reestablish your credit for little or no charge. Researching the marketplace is the best solution for finding the right sources. Your local library has a wealth of information at your disposal and it is free to sift through the pages. Take advantage of any opportunity that presents itself and you are well on your way to building your credit.

It is important that you be cautious with your credit choices. Take each step very slowly and consider all of your options before making a final decision. When you have several creditors making offers, it can be very difficult to decide on which one to deal with. Follow these simple guidelines when deciding on and dealing with a creditor:

1. What interest rate are they offering?
   • The interest rate on your credit account plays a serious role in your ability to keep up with your payments. If possible, always make full payment. Keep in mind that making full payment may not always be possible. This is why you need to consider carefully the interest rate that you are agreeing to.
     The interest rate will apply on all minimum payments.  An example is below:
     Balance owed on account: $350.00
     Interest Rate: 5.7% (.057)
     Minimum Payment: $19.95
     Think about this, $19.95 only pays for the interest that is going to be added to the balance owed.  You may think that you can subtract $19.95 from the $350.00 owed, however, do not forget to add the .057 to the balance.  At this rate, your balance owed will go down very slowly and continue to accumulate interest on a monthly basis
2. Make your payments on time.
   • Do not make payments before 30 days of the last payment and do not make a payment after 45 days of your last payment.  Payments received after 45 days are considered late and payments made before 30 days also get a bad review by creditors.
3. Do not apply for credit more than 3 times a year.
   • If you do, you can easily be denied credit because those actions are perceived as shopping for credit.  If you are suspected of shopping for credit, your creditors will deny you.  You can keep track of how many times you have applied for credit and with who by looking at your credit report.  Your credit report shows all the people have inquired into your report for the last 2 years.  After 2 years, the listing drops off your report.  Once you begin paying a creditor, take it slow. You are going to get many offers for credit and it is extremely tempting to take them all up on their offers.
4. Keep all of your receipts and contracts
   • Keep all of your receipts for payments made to any creditor. Yes, creditors have been known to misplace a payment received, let’s hope it isn’t yours. Rest assured if it is, providing you kept your receipts. Saving your contract with any creditor is highly advised. In the event that a dispute should arise, the creditor will be sure to throw in comments concerning your agreement and signature on the contract.

The most important thing to do with regard to your credit is take pride, protect, respect and especially enjoy it. Having good credit is a luxury and can widen the horizons of possibility for you and your future providing your pursue your credit with caution.