Is your credit good enough?

Many of us are thinking right now about our finances, especially around the Holidays. Because at this time we tend to spend, spend, spend! And now when the economy is not doing so good we tend to worry sometimes about what is in store for us.

So what do you do? Do you know what your credit score is? Have you ever even seen your credit report? And why does it matter? Many people sometimes tend to live paycheck to paycheck and they tend to ignore credit cards or loans, they do not know how much this affects them. They pay what they can on what they consider the most essential of bills (food, utilities, etc) and think that by not paying the credit cards then they can just ignore it and in 7 years it will go away. Well, that may be so, but 7 years is 7 years.

I work for a Real Estate Management company and have been dealing with people’s applications for over 6 years. I learned how to read credit scores, and credit reports. So what does a landlord look for when reading a credit report? Well, first of all we look at the credit score. Anything above 600 it’s decent, but credit score alone does not mean you have a good credit. There are many things that come into play. We look into the ratio of number of accounts, how many collections, and Public Records.  If a person has several accounts in good standing and a few collections and they are medical or student loans, then most landlords will let those slide by, but if the collections are under the credit cards or in any loan, then these we see as a negative points in your application and we might request a guarantor or extra rent security in order to approve your application.

So what should you do if you are struggling financially and don’t want to ruin your credit? Make a Budget, see how much money are you bringing in and how much do you have in bills in a month. If the income is lower than the bills call some companies and request a payment plan. Many credit card companies and utility companies prefer to give you a payment plan rather than have you default in your payments. Another thing that is good practice, is that if you owe credit cards try to pay more than the minimum, even if it’s only $10 more than the minimum you are still better off because many times the minimum payment goes mostly toward interest, and you are not paying off your debt so with time your account is probably going to grow, by paying a little bit more (paying double is even better) you pay something towards the actual balance of your payment and your balance will get lower each month.

You can go online and check your free credit score online and  see how you can take steps to improve your credit and stay financially stable.