Things you must know about credit

 Ten Essential Things You Must Know About Credit

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1) Credit isn't cash or a cash substitute

Credit's so easy to use, it's hard not to think of it as an extension of your wallet. That's the exact kind of thinking that can get you into credit trouble. Even if you've been using credit for years, it never hurts to re-familiarize yourself with the very basics of what credit is and how it works.

2) Having good credit is important

Many people don't realize the value of good credit until they need it and don't have it. Credit is used for more than just credit cards. You need credit for buying or renting a home, getting a new job, and even for getting cell phone or other utility services.

3) Good credit doesn't happen overnight

You already know that good credit goes a long way in today's society. Learn what it takes to build the kind of credit history that always gets your applications approved with low interest rates and no security deposit.

4) There's no one-size-fits-all credit card

And if there were such a card, it'd fit like one-size-fits-all clothing. Since there are so many different types of credit cards, it's just as easy to get one that doesn't fit you as it is to get one that does fit you. Learn about the many kinds of credit cards that are out there before applying for one.

5) Debt can happen to anyone, even you

Too much debt can have a negative influence on your credit, making you look riskier to future lenders. Making sound financial decisions and using credit sparingly will keep you from being bound by debt.

6) Creditors talk about you behind your back

Creditors and lenders report your every move to credit bureaus. They share this information whenever you make a new application for credit. Your credit information is compiled in a credit report and scored using a credit score.

7) You can find out what they're saying for free

Federal law entitles you a free copy of your credit report from each of the three credit bureaus each year. This free credit report doesn't require you to signup for any other products or services, so you have absolutely no obligation.

8) You can ask for a lower interest rate

High interest rates make credit expensive. With a good credit score (700's or better) and a good payment history, you're in a good position to negotiate a lower interest rate.

9) It's possible to have too many credit cards

It doesn't take long to build a collection of credit cards. As soon as you get one credit card, it seems every other creditor wants to offer theirs too. Having too many credit cards can affect your credit score and make it hard to keep up with your credit card payments.

10) Closing credit cards can hurt your credit

When your creditor makes you angry, the first thing you want to do is close your credit card. Before you utter those words ("I want to close my account") know that closing your credit card might hurt you a lot more than it will hurt your creditor.

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