gladwell orthodontics_ma.pdf
Get an Early Start
It may surprise you to learn that some debt can be better than none when it comes to your credit score. “A modest and manageable amount of indebtedness looks better to lenders because they see you can be trusted to handle the responsibility of making timely payments and keeping the account in good standing,” says Wilson. He offers this advice for establishing a good credit history: •
Apply for a line of credit you know you can manage, such as a department store credit card. Make occasional purchases and pay at least the minimum amount due each month.
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Never skip a payment, even if you have to borrow from your parents to keep the account in good standing.
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Monitor your credit report regularly and address any discrepancies immediately. A credit report can reveal simple accounting mistakes, as well as identity theft.
Wilson recommends going to www. annualcreditreport.com, where you have guaranteed access by federal law to a free yearly credit report.
Look Beyond the Numbers
Wilson cautions borrowers to pay attention not just to their overall indebtedness, but also to the mix of debt. You might have $15,000 in credit card debt and owe $15,000 on a car loan, but that appears more favorable to a lender than having $30,000 in credit card debt. “A lender understands
Have you been approved for 25 credit cards? Our financial experts are not impressed! Having too many credit cards – even if they all have zero balances – will look risky to a lender. One financial planner described this as a ticking time bomb waiting to go off.
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you probably need a vehicle for transportation, so he or she will be anticipating a car purchase in your future,” Wilson says. “They also see the car loan as something that is reduced over time as you make payments, whereas credit card debt is just as likely to continue going up.”
Know the Score
Richardson says FICO is considered the standard among credit scoring systems. Here he shares the FICO rating scales:
Excellent 781-950 Good 661-780 Fair 601-660 Poor 501-600 Bad 500 and below If you check your score and don’t like what you see, keep in mind that lenders are in the business of lending and may be more willing to work with you than you realize. Wilson says even a bankruptcy, while not desirable, will appear as a known risk to lenders, and that can play in your favor. “A bankruptcy gives a full and complete picture to a lender – they know they can charge a higher rate, and because bankruptcies became relatively common in the financial downturn, they don’t necessarily carry the stigma they once did,” he says. The mere passage of time can improve your credit standing, as adverse credit is eventually dropped from your record. But it’s better to be proactive in establishing good credit and working to protect and improve it over time. The best things in life may be free, but for everything else, it’s nice to know you can charge it.
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