Consumer Credit 101
In today’s world, it is important to be wise with your money and investments. But the flip side of using your money wisely is improving your creditworthiness. Below is a quick primer on how to build and use credit responsibly, increase your credit score and maximize your borrowing power.
Why Good Credit Is Important
As a consumer, having a good credit score and credit history can offer you many benefits.
Other than allowing you to buy and use things now without having to spend cash up front, having good credit also allows you to get even more credit at lower interest rates. This might sound redundant, but it’s actually a big deal.
And for those who think of credit as simply a means to buy more stuff at the mall, good credit is actually much more than that.
Here are some other ways that having good credit can help you:
- Get a smartphone plan from major service providers
- Buy a new or more reliable vehicle
- Rent an apartment or house
- Purchase a home or condo
- Get high-paying jobs (e.g. jobs in finance or security)
How to Improve Your Credit Score
There are many ways to improve your creditworthiness. And while some of them have a higher impact than others, all of them are important and are deserving of your attention.
- Pay your bills on time
- Keep your credit card balances low (10% utilization is best)
- Open multiple credit accounts
- a variety of credit accounts (not just credit cards)
- Keep revolving credit accounts open indefinitely
- Increase your income
Basic Types of Loans and Credit Accounts
There are many different types of credit products available from banks and other lenders. While you don’t need to open all of them, many lenders do like to see a variety of different types of loans and credit accounts on a prospective borrower’s credit report.
Here are some of the most popular types of consumer credit products
- Credit cards from banks and credit card companies
- Credit cards from retail stores
- Home mortgage loans
- Vehicle loans
- Home equity loans
- Home equity revolving lines of credit
- Personal loans
If you are looking for ways to improve your credit score or are looking to finance a big purchase in the future, contact Quick Capital Funds to see some of the many options that may be right for you.