On the Right Track: Are You Doing Everything Possible to Keep Your Finances Secure?


Credit is key to having stable, secure finances, yet many people do not understand how having good credit can impact their lives every day.  There are some basic steps that everyone can do to ensure they stay on the road to good credit and secure finances.

Bad credit can cause, at the minimum, higher interest rates in your automobile and home mortgage loans.  If you take out a credit card, you will be paying high interest there as well, impacting your monthly bills and making it difficult to pay off the balance in a timely manner.  Long-term, bad credit can keep you from making purchases or receiving loans for things that may be life-threatening, such as a medical procedure or medications that you need.

Are You Guarding Your Credit?

There are many ways for your credit score to be impacted negatively, so you should be monitoring your credit regularly.  Identity theft and fraud is a huge problem, with millions of people affected annually. Keeping track of your credit score and credit use is an easy way to combat this and, if it happens to you, stop it before it gets out of hand.

How Can You Keep Your Finances Secure?

The average credit score nationally, according to FICO, is 691, with the dividing line between good and bad credit coming at a score of 620.  Good credit doesn’t even start for most lenders until the 700 mark, which is above the average score for most people.  The higher your score, the better your interest rates.

On average, only 39% of people have actually obtained their credit reports to help them understand and improve their credit scores.  Today, accessing your report is easy and usually free, so the first thing you should do is grab a copy of yours.

Once you have your report, understanding it is the next step to secure finances.  Your score is made up of five main factors, each of which rates a different percentage of the total score.

Your payment history and amount and duration of late payments makes up 35%, so if you have late payments on your report, starting now to make those payments, even just the minimum, on time will help improve your score.  How you utilize your credit ratio is 30%. For example, if you have $10,000 of credit available and you are using $9,500 of it, that doesn’t look well to other lenders.

The length of your credit history is important.  The longer you have had credit and paid well, the better your score.  This is worth 15% of the total. Types of credit – installment, revolving, and mortgage – accounts for another 10%, and recent credit inquiries is the final 10%.  You don’t want a lot of people checking your credit, especially if they are denying you.

Bad Credit Fixes

It can become a vicious revolving cycle – you need credit but don’t have it, so you borrow money, but the interest is high, so you have to borrow more money to pay that loan off.

There are many options for loans, but when you have bad credit you can feel backed into a corner with no options but high interest, bad term loans.  There are safer alternatives, like Cigno loans, but you have to be very careful and be sure you can afford the terms of the loan.

The best way to avoid high-interest loans is to make sure your finances are secure through monitoring your credit and understanding how it works from the start. Remember, your credit didn’t go bad right away, and it will not improve right away, either.  The key to stable finances is consistency and time.