Well… *long pause*
This is always the beginning of an answer I don’t want to hear to a question “They” don’t want asked. The question: ‘How’s your Credit (History)?’
Technical… Credit is the provision of resources by one party to another party where the second party does not immediately pay the first party for the resources in full, thereby generating a debt, and instead arranges either to pay for or to return those resources at a later date. (Source)
Party this party that, sounds like a lot of fun doesn’t it? Well of course it is your using someone else’s money to pay for stuff you want or need. When the party ends, and you have bought what you wanted or paid for what you needed, the History begins. (It’s a play on words, get it? Oh never mind)
Credit History is essentially how you paid back the Credit you received. (On Time, Slow, Real Slow, Really REALLY Slow, or Not at All.)
Real Life… We live today in a society where everything is cash or credit, pay now or pay later; most it seems to opt to pay later.
“But Mr. *Mysterious Online Personality* you just told me in your prior entry that Paying Cash was not 1 but 2 nails in the coffin.”
Yes, yes I did; however the obvious response would be don’t buy too much of what you don’t need, but finance what you purchase. (This all has to do with our consumer mentality and keeping up with the Joneses, and is NOT a topic I want to touch.)
I tangent, Credit in the real world sense is the risk involved when a bank, or lender invests their money in you; how likely are you to pay that money back?
Credit however is not some complicated formula; essentially there are three main reporting agencies, (Equifax, Transunion, and Experian) that issue you a score based on certain criteria.
1) Payment History: Simply put on time payments raise your score while slow payments negatively affect your score based on how late the payment was made.
2) Exposure: How much dept do you owe, if you have an insurmountable amount of credit card debt your exposure (amount of monthly payments) is higher therefore your risk level rises.
3) Public Records: If you have any unpaid tax liens, judgments or suits this will adversely affect your score.
4) Credit Inquires: If you have been out shopping your credit around each and every pull that shows up on your bureau will points each and every time.
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