Consumer Credit Counseling Services Stress the Importance of Good Credit

Generally speaking, we are not taught in school how to handle budgeting and credit issues. It just wasn't part of the curriculum—Did you ever take a class called Credit 101? Probably not. For the most part, we have had to learn about credit and budgeting on our own. Unfortunately, many of us have learned the hard way. The consequences of poor credit can affect many more aspects of our lives than we may realize.

So what does it mean to have good credit? And how important is it to your financial health? Non-profit Consumer Credit Counseling Services (CCCS) organizations like ours offer important lessons that stress the importance of building and maintaining a good credit record for life.

Understanding Credit

Consumer Credit Counseling Services (CCCS) agencies like ours advise that the first lesson for handling credit responsibly is to understand what the term credit really means. It is essentially a loan, of either money or an item of value that is under a contractual agreement to be repaid to a lender within in a certain time frame. This may seem obvious, but many consumer credit counseling services work with individuals who are not fully aware of this concept. To be a responsible credit user is to make sure that you always repay the lender on time.

Building a good credit record takes time—the more you build your creditworthiness, the more lenders will be willing to extend you new credit. Few lenders will extend credit to someone who is likely not to repay them on time. This is why it is so important to portray yourself as a responsible borrower.

So, who is interested in your credit besides credit card companies? You may be surprised to know that insurance companies, landlords, and employers regularly check on an individual's credit record to determine that individual's level of financial responsibility. Consumer Credit Counseling Services (CCCS) agencies like ours are able to work with individuals to find ways of repaying delinquent debt to creditors and improving their creditworthiness over time.

Counseling Consumers on the Importance of Credit Reports

Think of your credit report as a sort of financial report card. Your credit report details every aspect of your credit history, from your payment patterns to your employment history. Prospective lenders can obtain a copy of your credit report to get a full picture of your credit history. A credit report also includes factors such as the number of inquiries made by lenders on your credit history, any liens or bankruptcies you may have had, and a detailed account of how long it takes you to repay your loans to creditors.

In addition, a credit report also includes a numeric value called a credit score, which is an extremely important determining factor for lenders in deciding whether or not to extend credit. Everyone has three credit scores, which are commonly known as FICO scores after the company that developed the software. The three scores are for each of the three major credit bureaus: Experian, TransUnion, and Equifax. Fair Isaac developed a model to determine credit scores, which uses a mathematical algorithm broken down into the following percentages:

• Payment History – 35%
• Outstanding Debt – 30%
• Credit History Length – 15%
• New Credit Applications – 10%
• Your Credit Mix – 10%

To obtain a free copy of your credit report, visit www.annualcreditreport.com or call toll-free (877)322-8228. Once you have a copy, it is very important that you check for any errors that may appear. Errors are a more common occurrence than you may think, so you may want to review your report with a reputable Consumer Credit Counseling Services (CCCS) agency like ours to identify these inaccuracies and learn the proper way to correct them.

Get assistance from a Consumer Credit Counseling Service

National Foundation for Credit Counseling (NFCC)-approved Consumer Credit Counseling Services (CCCS) such as ours specialize in educating individuals on every aspect of credit reports and credit scores. Consumer credit counselors can also help you learn strategies to improve your credit score and become more creditworthy to lenders. Our certified counselors educate consumers on the essentials of building a stronger credit record thereby achieving their goals. Call our credit counseling agency today to get started on building a brighter financial future and reaching your financial goals.