A Love Hate Relationship How your credit score can open and slam doors for you
Below is a MRR and PLR article in category Finance -> subcategory Credit.
A Love/Hate Relationship: How Your Credit Score Can Open or Close Doors for You
Word Count:
411Summary:
Master your finances and spending habits. Just as we don't eat solely out of hunger, we don't spend only out of necessity.Article Body:
Achieving financial success requires more than quick fixes like credit card cut-up seminars, debt consolidation, or transferring balances for temporary interest relief. These strategies often fail because they don’t address the core issue: overspending. Even if you're earning more, without reducing expenses, debt will accumulate. Managing your finances is crucial. Money, like food, isn't used only to satisfy immediate needs; it requires mindful planning and restraint.Debt Forgiveness Warning:
Be cautious with debt forgiveness. If a company forgives your debt, they might issue a 1099-C form, adding the forgiven amount to your taxable income.
Credit Scores: The Gatekeepers of Financial Opportunities
Your credit score, also known as your FICO or Beacon score, directly influences the interest rates you qualify for. Scores range from 500 to 850. Where do you stand?
- Understanding Credit Scores:
- 500 and below: Serious financial trouble.
- 650 to 680: Difficulty obtaining credit and likely higher interest rates.
- 700+: Excellent score.
How Your Credit Score is Determined:
1. Payment History (35%): Prioritize timely payments.
2. Amounts Owed (30%): Keep balances low.
3. Credit History Length (15%): A longer credit history can boost your score.
4. New Credit (10%): Be cautious with new credit card applications.
5. Types of Credit (10%): Diversity in credit types, like mortgages and store cards, can impact your score.
Check Your Score:
Utilize the three major reporting agencies?"Equifax, Experian, and TransUnion?"to check your score. Annually, each typically offers a free report. Comparing reports can reveal inconsistencies or errors, which you should address.
Shopping for Loans:
Note that each credit inquiry can reduce your score by two or three points. If you're searching for a mortgage, consider using a broker who can obtain one report to shop across multiple lenders, preventing a potential drop of up to 15 points by approaching each bank individually.
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