You know credit matters, and youve even learned sometricks for boosting your score.
Credit can sometimes becounterintuitive to good money habits.
Like it or not,credit matters.
In our Everything you better Know About Credit series, were breaking down the basics.
Thus, youd think staying away from it completely would be good for you altogether, right?
Not when it comes to credit.
Andbill providers are legally allowed to charge morefor customers with risky credit.
If you dont have credit at all, they might consider you a risk.
This is the amount of credit you have available to you versus the amount you actually use.
Ideally, you want lots of available credit that you dont actually use.
The problem with this is you might be tempted to use it!
Your score is just a number.
Its an important one, but keep in mind, its your credit report and history that really matter.
Still, there are responsible ways to make credit utilization work for you.
You could keep an old card open and put it away so youre not tempted to use it.
Just check that to keep track of any accounts you have open.
Settling Old Debts
Youd think debt settlement would help your credit.
Rather than just ignore your overwhelming debt, you agree to at least paysomething.
That should help your score, right?
However, while they might do this as a courtesy, theyre not required to do so.
Credit can be confusing because we typically think of a credit score as a way to gauge financial health.
Its not, though.
Your credit score estimates how well you handle credit, not how you handle debt or savings.
For that reason, it doesnt always go hand in hand with good money habits.
