Why is my credit so important?
What is Credit?
- Credit is the ability to borrow money
- Credit is extended through several means, including credit cards, personal car loans, and home mortgages
- Credit is a privilege, not a right
- Using credit can help you reach your goals of home ownership
What is a credit report and credit history?
- Your credit history shows how you have managed your finances and repaid you debts over time
- Your personal credit report begins the first time you apply for credit
- The most important component of your credit report is whether you make you payments on time
- Any time that your credit report shows a late payment, a “red flag” is raised and you may be denied credit or pay more to get it
Why is a good credit history so important?
- A good credit history increases the confidence of those in a position to loan you money
- Lenders are more likely to extend credit again when they see you have paid back your loan when and how you agreed
- The better your credit, the lower the cost of obtaining credit
- If your credit history is not strong, you will probably pay higher interest rates and fees
What are the benefits of good credit?
- Good credit will help you achieve both short-term and long-term goals
- Having the ability to borrow money when you need it can give you flexibility and help you meet your goals
- Trust is a key factor. Lenders are only going to loan you money if they trust you to pay them back
- It’s important for you to understand how credit works, use it wisely and avoid having too much debt
How do you establish a good credit history?
- The key to establishing a good credit history is honoring your promise to repay loans or credit cards as agreed
- Failure to establish and maintain good credit will make it difficult and costly for you to borrow money for your dream home
How do I build credit in order to be ready to buy a home?
- Open your own bank accounts and manage them well
- Never spend more than you have in your bank accounts
- Get a gas/store credit card and always pay your bills on time
- Take out a small loan and repay it monthly in full and on time
- Get a secured credit card linked to a savings account
We have gone over lots of details about credit in this section. Go to Your Real Estate Academy.com and download the notes.
We have a special “Building Better Credit” guide for you to download from Your Real Estate Academy.com.