As recently reported in the media by the New York Times and other publications, lenders have been raising their standards and making it more difficult to qualify for credit, including auto loans, credit cards and mortgages. This is a result of the large number of defaults on these loans, which are occurring as Americans feel the pinch of today’s economy.
Now, more than ever it is important to know what your credit score is and keep it as high as possible. We’ve all seen the ads on television for cars and trucks available at steep discounts with zero percent interest. Or credit cards with no payments for six months. Or that home prices are down with mortgage loans at record low interest rates. The US Department of Commerce has announced that new home construction is at a 50-year low.
All this means that, if you have good credit, or can improve your credit to make it better, this is a great time to get a great deal on just about anything. Unfortunately, these special deals are, for the most part, only available to consumers with good credit. Those with bad credit will find that they can’t get that zero percent interest rate on a new car or even qualify for a mortgage loan. To the contrary, those with poor credit will see their credit card interest rates go up and their spending limits drop. They will also see their insurance rates go up too.
If good deals were not enough also know that Fortune 500 companies and an enormous number of smaller employers are still checking credit scores as part of their hiring process. For these companies credit scores are seen as an indication of reliability. So, if you are looking for a new job or promotion, bad credit may be, at the very least, a strike against you.
So what to do if your credit needs improving? The path to good credit will be different for everyone. The first step is to stop doing anything that can harm your credit score. If you’ve been turned down for loans or credit cards, stop applying for a while. Continuing to apply for more credit when you’re being rejected will only lower your credit score further. Make sure you’re paying all of your bills on time. If there are bills you can’t afford contact your creditors and agree to amounts you can afford. You may even be able to reduce your rent by contacting your landlord, particularly if rental prices have gone down in your area.
You will also want to get copies of your three main credit reports from Experian, Trans-Union and Equifax. Yes you can get them for free. And, learn how to read them, correct mistakes and remove negative information.
These steps may seem burdensome and you should know that they are easier than you think. Taking control of your credit scores and debt can reduce stress, increase your standard of living and improve your life overall.
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