Navigating Credit

As your personal or business credit rating is truly the financial equivalent of your Permanent Record, it is important to maintain good standing.  Your credit rating affects not only your ability to acquire a credit card, but is also taken into consideration when you are seeking a loan to buy a car or a home.  Less well-known is the fact that your credit may prevent you from obtaining or significantly impact the pricing of insurance - including health, auto, homeowner's and life policies - and may even be a deciding factor in whether or not you qualify for an apartment rental or need to put down a deposit for your utilities. 

Regardless of whether you are coming from a business or personal perspective, having a good credit rating signifies that you are a good risk, or someone that potential lenders or underwriters see as a responsible individual.  While it sounds simple, the best example of good credit is represented in a history of incurred debt, followed by timely and consistent payments.  Getting started with credit is a responsibility that should not be taken lightly and your ability to make payments - and to pay on time should be the main consideration.  

Following are some additional considerations with respect to maintaining, or recovering, good credit standing:

  • Keep track of your credit score, checking it at least twice per year - aim to get it and keep it above 700

  • Utilize credit responsibly, seeking to pay off balances in the most timely manner

  • Avoid unnecessary and excessive late fees, additional interest or increased interest rates by always paying on time

  • Maintain less than ten creditors if/when possible (aim for less than five for personal credit)

  • Be alert for credit/identity theft and be mindful that this includes family members; always review your statements to ensure the transactions are yours

  • If your wallet or cards are lost or stolen, report it immediately to prevent personal or business losses

  • If your credit is already damaged, do not work with a consolidator or file for bankruptcy without first talking to a qualified financial advisor about your options

  • If you owe and cannot pay, do not ignore the bill; instead, contact the creditor to whom you owe funds, proactively work out a payment plan, and commit to sticking to the plan

It is important to recognize that credit should be used as a short-term solution to a short-term cash flow necessity, rather than as a means to fund a lifestyle or business luxuries you cannot presently, and may never be able to afford.

If that ship has already sailed; however, and you find yourself or your business in less-than-optimal credit standing, feel free to reach out for a free consultation to see if we may be able to help.