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What is Good or Bad Credit?

davidsapper
Feb 1, 2014
2 min read

First off, what is credit? Companies report your payment history, good and bad, to different bureaus. These reports then reflect a score that determines many things in life. Your car payment, being able to buy a home, getting a job, and even insurance rates.

Good credit takes work, bad credit is easy. You can repair your credit but it takes time. Once you do buy a car, make sure you do everything in your power to make your payment on time. After only 12 months of timely payments, your credit will be on its way to being healed.

Getting your credit "repaired" is a scam. There is no way to easily repair your credit. If there are errors on your report, there are avenues to get them removed but if the credit marks are legitimate, getting them removed by so called "credit repair" companies is all but impossible. Read carefully, these companies imply that they can remove it but nowhere do they promise it. Save your money and use it instead to pay your bills on time.

The bills that matter get paid first. Utilities and rent don't report to your credit unless you are evicted or you do not pay at all, there are no late payments. On the same note, they do not improve your credit. Credit cards and car payments report how well you pay them, and they must be paid every month on time.

Do not pay old collections. I know, doesn't sound right does it? But old collections that have been sold off to aggressive third party debt collectors is past repair. They fall off after a certian amount of time with no activity, if you make even a $1 payment, the time starts over again. Never pay a collection once it goes to a third party, only pay the original debtor.

The quickest and easiest way to repair your credit is to get new credit and pay it on time. Easier said than done. A new car loan is the most effective way, since you're required to make a payment every month, unlike a credit card, it makes the most difference to your credit.

You can also get a secured credit card. If you give a bank a deposit of say, $500, they will give you a credit card worth $500. Some are much better than others, so shop around.

As the old saying goes, anything that works takes work. Pay your bills on time, set a budget you can live with, and before you know it your credit will be something to be proud of.