By establishing an agreement to borrow money on credit, you agree to a repayment plan, usually with interest as compensation to the lender. The advantages of using, establishing and maintaining credit are numerous.
• Purchases are made easier by the elimination of cash or checks. They offer the opportunity to purchase that ‘great deal’ at a moments notice and can be repaid on a schedule that fits your budget needs.
• The immediate availability of funds by using credit is a source of security in cases of emergency. The financial concerns that often accompany illness or unexpected disaster are eased with the ability to pay on credit.
• When traveling, a credit card is indispensable especially when traveling outside the United States. You can purchase traveler’s checks or get a cash advance with a credit card and will often get the best rate of exchange as the merchant is confident of receiving payment. Some credit card providers offer additional benefits that may come into play when traveling. Be sure to check out your benefit statement or contact your provider.
The Importance of Your Credit Report / Rating
Every action that you take when using credit, whether good or bad, is recorded by three major agencies (Equifax, Experian and TransUnion) that compile this information into what is called your ‘credit report.’ On-time and late payments, open and closed accounts, overdrafts, etc. are used to calculate your risk and the resulting report is made available to potential lenders to review. The better your credit report the more benefits to you such as lower interest rates and fees on credit cards, mortgages and car loans.
The importance of maintaining a good credit report can not be understated. Not only does it affect your ability to borrow at a fair rate, employers may review the report to weed out potential employees who may show signs of irresponsible behavior; landlords look for a good credit rating to hedge their bets on being paid on time and often require a smaller deposit from a tenant with a good record. Other possible reviews may be made by insurance agencies and cell phone companies. Get your free credit reports by visiting us at Wow Credit Cards.com.
Establishing Good Credit
The first thing you need to do is to write down a budget that you know you can stick to. Without a written plan, you take the chance of overusing credit and overextending your income. Be vigilant about the interest rates you’re being charged on all of your accounts. Be especially aware of late fees—don’t get caught having to pay these exorbitant costs.
Request your free credit report annually to check for errors. This not only safeguards your credit rating, it also can raise a red flag to the fasted growing crime today—identity theft. Any unauthorized credit usage will be on your credit report. Immediately contact the creditor and the credit reporting agencies of errors and follow through with the solutions that they advise.
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