We are a country in debt. Not only is our government in debt, but we, as Americans, are in debt ourselves, and the problem is just getting worse! Recent studies have shown that ninety percent of Americans have at least one credit card – and they are using that card – A LOT!
The average family carries a balance of between $7,000 and $10,000 on all their credit cards. Over $1,000 per family goes on interest every year. And that’s just the average – some people owe much more! Overall, Americans spend over $1 trillion every year on their credit cards, and owe more than $500 billion of it. If debt continues at the current rate, then one family in a hundred will be forced into bankruptcy. Over 90% of Americans’ disposable incomes are spent paying back debts.
When you add credit card debt to the regular bills we have to pay each month, which can tax anyone’s budget. As a result, some bills go unpaid and others are paid late. Both of these instances can damage your credit sometimes so much that you think there’s no way you’ll ever be able to get out of debt and get credit for something important like a home or a car. The truth is that you can get out of debt and repair your credit nearly to what it was before you had credit problems.
It takes some time and a little work on your part, but it IS possible. Loan approvals and such depend on your credit score. That number is what determines if you can get credit, what your interest rate will be, and how much money potential lenders will give you. A good median score is 750, but the higher your score is, the more financially sound you are. While it’s always a good idea to try and stay away from credit, not everyone has a hundred thousand dollars lying around to buy a home or twenty thousand to buy a car.
Heck, for some people, scraping together five thousand dollars for a good used car is difficult. That’s why we need credit. So we can buy that which we cannot afford. Where the trouble comes in is when people begin to buy everyday items such as groceries and clothing on credit cards. Then those bills begin to get bigger and bigger until pretty soon, they’re paying the minimum amount due which will take forever to pay off. Plus, a lot of people just continue charging things even when they have a large balance on their account.
Your credit score defines who you are to businesses and you want it to be as high as it can be. It doesn’t matter how bad your credit is now. There are ways that you can raise your credit score no matter how low it is now. Don’t despair; just get started – right away!
First Things First – Your Credit Report
The very first step you need to take when trying to raise your credit score is to find out what your score is and what it means. Legislation called the FACT Act was passed that allows all Americans to get one free copy of their credit report every year. This report lists all of your debts you’ve had and your payment history on those debts. It will tell you where you owe money, how much you owe, and how you pay (on time, 30 days late, etc.).
All of that information is compiled together and then analyzed. After the analysis, a number is assigned to you as to what your credit fitness level is. Potential creditors then look at your credit score and decide if you are going to be able to pay back the amount of money you are requesting to borrow.
That’s the short version. Actually, there is much, much more involved in determining your credit score. However, what should be important to you knows how to read your credit report and how to raise that score so that you are able to get the things you need.
Remember that – the things you NEED, not the things you WANT!