Why is Credit Important?
Lenders use credit ratings to determine a borrower’s responsibility with past credit, and how likely that borrower will pay back their loan. A good credit rating can help you beyond making it easy for you to borrow money. It can help you if you are interested in purchasing things you want or need, a credit rating facilitates the purchase of large ticket items. A good credit rating can help you save money by borrowing at a lower interest rate. Most employers use the credit report as part of a background check prior to offering employment. Credit is used to establish utility services with your name and can even help you obtain lower rate insurance.
Build Your Credit
Establish a rental history or good credit. If you do not have credit, never rented or owned a vehicle that you have paid off, you need to establish credit in your name so that you are able to rent an apartment or get a loan for a home. This is something you can begin to work on prior to leaving the military service; however, do not fall into the trap of getting a credit card and not paying it off monthly. Start small and pay it off every month. Do not spend more than you can afford. A small line of credit around $500that you only use for gas is a good place to start, but if you have a large amount of debt that will hurt you when you try to apply for a place to rent or get a loan
How to Get Started?
To get a sense of your credit , you will need to first get a copy of a recent report. Not all creditors report to all 3 major credit bureaus, so it’s best to get a report from all 3 and cover all you bases. Under the “Fair Credit Reporting Act” a consumer can request a free copy of their report from Equifax, TransUnion and Experian once every 12 months, without affecting their score. You can also request it for free from www.AnnualCreditReport.com.
Confirm that the information provided in your report is accurate and current. Poor credit rating can be associated with Identity Theft. Many consumers don’t know that they are victims until they review their credit report. If mistakes are found, notify the credit bureau who is reporting it and request an investigation and verification.
Review Your Credit Report
Each report may be formatted a bit differently, but they all share the same information:
- Identifying information – Name, address, social security number, birth date, current address, and employers.
- Credit information – details on accounts like credit cards, installments accounts, and personal loans. It will show payment history including late payments, missed payments, collection accounts etc.
- Public information – this section will show bankruptcies, foreclosures, tax liens, and judgments.
- Inquiries – this section will have the names of those who have obtained a copy of your credit report and how often you have applied for credit in the past two years. The Fair Credit Reporting Act gives consumers the right to question information and correct mistakes on the report.
Tips for Improving Your Credit Report
Poor credit can hurt you financially. Use these tips to help you improve and maintain your credit:
- Correct any inaccurate information
- Pay your bills on time
- Minimize your debt
- Apply for and open new credit accounts only as needed
- Use credit cards responsibly
- Re-establish credit if you have a problem
The Housing and Urban Department provides free counseling with approved local non-profit agencies that can help you understand and manage your credit.[/vc_column_text][/vc_column][/vc_row]