| It's not uncommon for people to have a poor credit | | | | of tangible value. The most common are car loans and |
| rating. For many their credit score remains a mystery. | | | | mortgages. Here the loan is backed by something |
| They don't understand how to improve it. They think it's | | | | tangible in case it defaults. |
| important to get as many credit cards as possible. | | | | 2) Unsecured: Here the bank has no collateral to back |
| While this strategy may seem tempting, it's not always | | | | up the loan. The most common unsecured loans are |
| the best solution. Before trying to fix your credit | | | | credit cards. |
| problem, it's important to understand exactly what | | | | The effect of credit cards |
| goes into the credit score. | | | | Credit cards can affect your credit in both a positive |
| The following are the main things that are taken into | | | | or negative way, depending on how you use it. An |
| consideration when calculating your credit score: | | | | established account that's used responsibly over many |
| Payment history: This looks at if you're making late | | | | years will help. However late payments will have a |
| payments or not. You should always try to pay your | | | | negative impact. Late payments will stay on your |
| bills on time. | | | | credit history for years and even appear after the |
| New credit: This is any new loans you get within the | | | | account is closed. |
| last 90 days. | | | | It's also important to only have a few well established |
| History: Older people with an established credit history | | | | credit cards. It may be tempting to accept every |
| have the advantage over younger people who are | | | | pre-approved offer you receive, however too many |
| just starting out. | | | | will eventually drive down your credit score. |
| Amount of debt: This is where many people get into | | | | Remember to use credit cards responsibly. To avoid |
| trouble. It's important to only borrow money if you can | | | | expensive finance charges, make sure you pay the |
| afford to pay it back. | | | | balance off every month. They should only be used in |
| Types of credit: There are 2 types - Secure and | | | | case of an emergency. If used correctly they can help |
| unsecured. | | | | you establish good credit for years. |
| 1) Secure: This is when credit is backed by something | | | | |