All Things Shiny: Let’s Talk About Credit!

Life often revolves around the subject of credit. Just what is it anyway? Join us as we discuss the ever present topic of credit!

What is credit?

In this life, it would be difficult to say there is not any record of your spending habits. This is particularly true when what you are planning on buying is quite large and you do not have the capital on hand. The option to complete the purchase would have to do with borrowing money—this is where credit comes in.

By the strictest definition, credit is all about borrowing. It will dictate you capability to borrow and which amount will be attainable for you. When taking out loans (no matter what sort of loan it is), it will be your credit that will be the deciding factor in the approval and the terms of your loans.

As you can see, credit is quite important. The final result of this is your credit score.

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Just what determines your credit score?

Your credit will primarily comprise of your lending history. Your credit score will determined after credit bureaus process all of your credit reports.

A good credit score will let you borrow more amounts of money with even better repayment terms and less interest. Good credit scores are not built over the span of a few months. It is a compilation of several years of paying bills on time and repaying any loans in an orderly fashion. It is even better if you end up paying more than you should for your monthly scheduled payment.

What is important to remember is that even credit reports may have issues with them. As such, it is imperative that you keep a sharp eye out for your credit reports and credit score. You can effectively do that by:

Asking for a credit report more than once a year

Most people do not usually check their credit reports until it is time to take out a loan. As we mentioned earlier, credit reports give you an idea of your current credit standing. If you are worried about paying any fees, credit bureaus are legally obligated to provide you with a free copy of your credit report once a year.

While taking advantage of that is smart, it is even better if you review your credit report in a quarterly manner. This way, it will be easier for you to detect any anomalies that need to be straightened out. Errors in your credit report can ultimately affect your credit score.

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Reviewing your monthly billing statements religiously

With the risk of identity theft being higher than ever, it is important for everyone to check any credit card statements and other utility bills religiously. If there are any odd charges or if the amount is higher than it should be, you must contest it. Immediately informing your bank or utility company that there is an anomaly is one of the best steps in protecting your credit score.

With this, hopefully you have a better understanding of the concept of credit!