Smart Military Money
Personal finance tips andadvice for the military lifestyle.
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Credit is a major component of financial success for military families.
Financing a home or buying a car is made easier when you have a good credit score. Learning how to get and maintain a sound credit report and score is tough when so many myths exist about scores.
Look over this list of five myths to get the facts straight:
Here is one of the most dangerous myths about credit for military families. It encourages needless credit card use. You don’t need big balances or interest to pay off to develop a good score. Pay your balances off in full when you can. Keeping a balance on a card is not necessary to boost your score.
Nope, not true. As long as you’re not asking a friend at a bank or car dealership to pull your credit report, which would look like an application for credit, then you’re fine. Check your credit personally, and your score is unaffected.
Yes, you can and should dispute inaccuracies on your credit report. But companies that claim they can fix your credit after a bankruptcy simply bombard credit reporting agencies with dispute letters. If the creditor can verify the black mark on your credit, then it sticks. If the creditor cannot, it will come off your report. There’s no magic solution or fix you can purchase. It’s just a matter of time, dedication and responsibility.
As long as your balance doesn’t get uncontrollable, it’s good to have high credit limits. Don’t abuse them and your score improves. Keep your balance below 30 percent of your limit as much as possible.
Income and assets don’t directly factor into credit scores. Credit scores are formulated to indicate to lenders the chance that you’ll default. The way you use your credit cards and pay bills is all that matters. It’s how you handle your income that matters; not how much you have.
With a few myths disproved here, you’re better prepared to build a solid credit score by controlling your balance and checking your credit.
Photo thanks to anolobb under a creative commons license from Flickr.
One Comment
If you use a credit repair company to clean your credit report make sure that all disputes are complete and off your report before you try to get a loan for a mortgage. We recently tried to finance a home and could not get Equifax to remove “Consumer” disputes comments from our credit report. Equifax wanted the creditor to send them a written letter and the creditor would not do that because it is not in their policy to respond to “consumer” disputes. Either way, you go round and round. The underwriter would not proceed with the loan with any disputes showing on our credit report.