Many consumers feel that their bad credit history means that they won’t be able to qualify for mortgages or car loans ever again. That’s simply not the case. There are many ways to improve credit – if buyers get smart about it.
Thursday is “Get Smart About Your Credit Day” and many financial institutions across the country will be offering credit card, mortgage and car loan tips for their consumers. The Kansas City Star points out that borrowers who are confused about some aspects of credit reports should take this opportunity to ask questions and learn about the factors affecting their scores.
The most common form of credit that people use on a day-to-day basis is credit cards. There’s no doubt that these pieces of plastic are convenient and even advantageous if used correctly, especially if they have a cash back or rewards program. Yet misuse of credit cards is one of the leading causes of bad credit.
The news source says that consumers need to keep in mind that purchases they make with a credit card can cost them much more than they initially assume if they don’t have a plan to pay the money back quickly in place. Between late fees and high interest rates, customers who don’t have the money to pay back a purchase almost immediately will likely hurt their credit score and their bank account.
Yet avoiding credit is also not an option for those with a poor score. When paying off old debts, cancelling a credit card can actually hurt a score, as it means a buyer has less credit. It’s better to simply leave the card open and use it to make very small purchases that the consumer knows they can pay off.