IConsumers have a common misconception that spending ONLY cash will prevent any sort of credit account reporting and potentially damaging their credit score what-so-ever. While this generalization is only partly true, a consumer must recognize that if they were to only proceed with cash purchases, they will have no credit at all; and as we know, no credit is not the same as good credit, and is often considered a negative thing to banks and lenders. A credit score is a complex formula created for banks and lenders to for-see the likely hood of a consumer returning a borrowed debt in timely payments, and this score is all they need to approve or deny an applicant for a loan.
Even if you’re not looking for a loan or seeking to apply for a credit card, it is always important to establish some sort of positive credit history as 35% of a credit report is based on debt ratios on credit card accounts, and another 35% is accounted for the length of credit history on a consumer’s credit report; determining their financial future.So what does this mean for you? This corners consumers to have at least one open and active credit card account with a low balance that reports to all 3 major bureaus in order to maintain a good credit score. We often prefer clients to sign up with a secured credit card with a $300 limit so the balance stays low, and they are not exposed to a large amount of debt.
If you have any questions, please don’t hesitate to reach out to us at 1-800-563-0405.
Sincerely
Regional sales director
Financial education services
Www.deborahtaylor.net
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