Credit can be complicated to those who are unsure of how credit works. Credit is a billion dollar a year industry that offers many possibilities. When handled appropriately and with smart decision making, credit can be a great thing that offers opportunities and advancement to you. Most people think of credit as how you are able to get a house, a vehicle or other loans for items of value, but credit is also used to judge character about a person when they are applying for a rental, a job, or other life advancement.
Take all the time you need to choose and create the right credit card accounts to reflect good credit and then maintain those accounts to boost your credit rating and score. So, how do you know which ones are your good accounts? There are many different types of accounts that offer relatively low interest rates or high limits. The first step in determining accounts that are worth your time are to read the fine print and see whether the low interest rate will balloon after a couple of months or whether the high limit will create a level of temptation you may not be able to avoid. Also, only work with companies you know and trust. Try to avoid ones that are new, unstable, or unknown. Besides being a smart choice for investing your time and money in, larger, more well-known lending companies are better to have on your credit report because they lend more weight when others are considering lending to you.
Good accounts should be smaller ones you can pay off in full before the due date and should be for things you need or reflect a starter account status. Starter accounts are those that are small or through trustworthy companies with slightly lower standards than other companies. They are often jewelry store accounts, store credit accounts, cell phone company agreements, and other small accounts. These accounts are perfect for first time borrowers or for those recovering from bankruptcy that essentially have to start over in building their credit. Once you get a small account, it’s up to you to be responsible and make your payments on time and in full each month in order to keep them in good standing and avoid going into more debt or experience financial hardship.
The longer a good account is in good standing on your credit, the higher it can push your credit rating and score. Large lenders, like real estate and car loans, like to see that you have a few solid accounts that you have had for years and have never been late or defaulted on. This shows that you can not only make smart financial decisions, but that you can also maintain loans and budgeting over an extended period of time, which will help them feel they are making a smart choice by investing in you.
Regardless of the small accounts you decide to go with, take the time to do some research and learn about how small accounts can help you with your credit status and create good credit over time. It’s important to take the time to invest in your own future by learning about the financial world and how loans and credit work. They may seem intimidating and seem to be something you have a hard time understanding, but with a little work and possibly a little help you can learn the tools and habits you need for a successful financial future.
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