Personal Finance Tip of the Week: Importance of Personal Credit

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As much as we try to deny it, credit play a huge role in our lives and economy, allowing us to reach financial, persona, and professionals goals that my otherwise by unattainable.

Your credit is more than just a record of your borrowing history and habits, it’s how people and institutions judge your character. It’s just fascinating just how much credit is used and considered now than it was before! Now people are pulling your credit for insurance policies and jobs, who knows what else! But in order to really understand the importance of credit, you have to understand it, especially the types:

Revolving credit: these are your credit cards and lines of credit. Revolving credit is limited to a certain amount that you can use every month, and then you pay off the balance you have.

Service credit: this would be your electricity, cellphone, water, heat, etc.

Installment credit: This would be your mortgages, car loans, personal loans, etc.

With these three different types of credit, its important to make sure you have a good mixture of credit. Not too many credit cards, not too many car loans. But also make sure you are borrowing within your means. Every pull on your credit hurts you more than you think. The key of your credit is to demonstrate how responsible you are. Even things like your employment history, your length at your current residence, and whether you own or rent your home play a factor in your credit! If you stay on top of it, the more credit worthy you will appear!

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