Bad Credit And Good Credit

Margaret was happy for her best friend and former roommate Deborah when she announced that she was buying a house. Although she was very happy for her friend, she couldn't help but to be a little green with envy. Deborah recently applied for a home loan through her bank and was turned down due to past credit issues. When Deborah mentioned that she was approved for a home loan from her bank, Margaret couldn't understand how her friend could get approved for a home loan and when she still owed on her student loan Well, there is good credit and then there is bad credit. An example of good credit is debt that helps you build equity or increase youret worth. For example, Deborah's student loan is an example of good credit simply because having education generally means that she will eventually have higher earning potential. Purchasing aew home is also an example of good credit because as it increases in value and will add to heret worth. Bad credits are the ones thategatively impact your financial future. Bad credit is described as financial obligations that last much longer than the item that you purchased. So, if you purchased a computer back in the 1990's and you areo longer able to use it, that's considered a bad credit. This also includes debts that haveo return toward increasing youret worth. So, how can someone improve his or her credit Maintain a good relationship with your creditors such as paying your bills in full and in on time. Also maintain a strong employment/self-employment history. Read your credit report thoroughly and check for accuracy. Before making a purchase by a credit card or loan, ask yourself whether it is good debt or bad. Will this help to increase or decrease ouret worth Credit experts recommend that debt shouldot exceed 25 percent of disposable income. Too much debt can cause one to repay their debts while struggling to maintain living expenses such as food, clothing and shelter. Avoid going into debt by trying to maintain a lifestyle such as shopping binges, expensive restaurants and vacations. Why is maintaining good credit such a big deal Besides being approved to buy aew car or aew house, it is important to maintain good credit should an unexpected event such as job loss or a major medical expense can put you into a financial crisis for one who'sot financially prepared. Having good credit is important in case you have to borrow. The Goodews Just because someone has bad credit doesn't mean that they have to stay in that position. There are many programs to help someone to get out of debt. Having aegative credit history, doesot mean a person cannot purchase aice home, aew vehicle, or start a business. There are many programs that offer bad credit loans made especially for those who have bad credit.