It is hard to live in modern society without any form of credit. You can’t get an apartment without passing a credit check. Unless you happen to have $30,000 doing nothing in the bank, you are not going to get a new car without credit. Even a potential spouse might want to see your credit report before tying the knot. It is a pretty good idea that more people should consider. If you haven’t checked in a while, you will want to take a look at your credit report so that you can see what might be holding you back.
If you’re not careful, credit can do more harm than good. Even if you’re careful, things sometimes get out of hand. Once they do, it is a short distance between bad and worse. No one wants to admit they have a credit problem because it is embarrassing. It suggests that you are irresponsible and bad with money. It brings everything about your decision-making into question. When a person’s credit card is rejected at the check-out counter, they always insist that it is a problem with the company. No one wants to admit that they messed up in such a socially awkward way. If this has happened to you, consider the following ways to get control of your credit before it gets control of you:
Get a Credit-Building Loan
Whether it is for debt consolidation or an emergency purchase, you are going to encounter a situation that requires more money than you have in a bank. You are going to need a loan. Regardless of what kind of loan it is, you are going to need to provide background information and possibly documentation. It is already a little embarrassing that you have to apply for a loan. Don’t get rejected because you don’t know where your birth certificate is.
Get a replacement birth certificate now when you don’t need it so you can have it ready when you do. A birth certificate will serve as one of the two forms of ID when needed. Some types of applications require it regardless of other ID you present. The important takeaway is that you will not be able to get a loan to repair your credit or any other reason without the proper documentation.
Savings
It doesn’t have to be one or the other. You can deploy a strategy of combining credit and savings to get the things you want. Step one is to save enough money to purchase the item you want and set that money aside. From there, you can use your credit card to purchase the item. Use the money you set aside to make your payments. To avoid interest payments, you can pay the balance the moment it is due. That way, you build credit without incurring interest or worrying about not being able to pay it off later.
You can also save money for the things you want and only reserve your good credit for things you absolutely need. Doing this successfully means you have to have the discipline of knowing the difference between the two and not rationalizing the one for the other. We can easily convince ourselves that what we want and what we need are the same thing. The real key to knowing the difference is asking yourself if the purchase can wait for a few weeks or if it has to be done right now. If it can wait, it should wait until you have built up some temporary savings. You still get what you want while protecting your credit.
Apply for Credit Before You need It
When you use credit strictly for emergency purposes, you don’t know when you are going to need it. If you are uncertain about your credit status, One of the best ways to find out is to apply for a reputable credit card and see if you can get it. Some will worry about whether applying for credit will hurt their credit. That is not the biggest concern if you don’t get it. The bigger concern is discovering why you didn’t get it so that you can correct the situation for when you need it. If you do get it, hang onto it so that you will have a safety net if things go bad at a later time.
Credit is neither bad nor good. It is all down to how you use it. Get all of your documentation in order so you can apply when needed. Use credit to complement savings. And apply before you need it so that you can correct any issues that come up.
