Today’s consumer is looking for a path to financial freedom during this difficult economic climate. Even if the consumer has not been impacted with a financial hardship such as a lost of job, reduced salary, divorce, death or medical emergency, they are looking for ways to safeguard their reputation.
The consumer knows that loans, bills, mortgages and credit card charges can increase very quickly, in particular the credit cards used for day to day expenses, it is a challenge to maintain the monthly payments. So in order to safeguard the consumer’s reputation and credit score rating, they need to review and relearn ways to protect themselves.
Some of the things the consumer needs to revisit are the following key ideas:
- Am I borrowing wisely and paying back promptly?
- Have I identified, avoided and recovered from various financial pitfalls?
- Have a gotten a recent copy of my credit report and do I understand it?
- Does my family have a financial plan for the future
Every consumer has applied for some type of credit, whether it be for a auto, boat, RV loan, a home mortgage or a credit card. The consumer has normally been approved for a loan based upon their ability to repay the loan, cash flow and their credit score.
The key to being a good credit risk is based upon the consumer’s credit score. This score is a numerical number assigned to the consumer based upon their credit history. This history is based upon number of opened and closed accounts, payment history, including late or missing payments and collection referral, original credit limit, current balances, etc. The higher your credit score is the better your ability to borrow at more favorable interest rates. The lower the score the consumer is charged a higher interest rate or decline altogether.
Basically, the consumer needs to obtain a copy of their credit report from one of the following three credit bureaus: Equifax, Experian or TransUnion. These companies’ reports will explain where the consumer stands when compared to other borrowers along with explaining their financial score.
Once you have this report, the consumer needs to set down and review this report for accurate information. Then the consumer needs to revisit if they have enough money to continue maintaining their current score. This means that payments are on time and they are using their credit wisely.
