I will be honest, after the past 18 months of listening to the word credit thrown around by every “expert” that opens their mouth or writes a sentence, I have had about enough of it. Are we in a “credit crunch?” Is credit really that important to our economy? To be honest, I just want to pay my bills and go a good vacation this week and I do not really care.
It is hard to believe that an intangible concept determined by some group that does not even know your name can have such a huge impact on your life. In fact, it is quite creepy.
Chances are, if you are reading an article about credit restoration then you have bad credit that you need restored back to good. The most important part of restoring your credit is to understand what exactly your credit is and what things effect your credit. I put things and your credit in quotations because to me they seem to be ambiguous phrases that need to be clarified and explained in order to move forward to financial freedom.
Basically, your credit score is a number (calculated differently by different companies) that is calculated by a mathematical algorithm. It is important to realize that credit is a numbers game. It does not factor in the human circumstances; such as job loss, natural disasters, health problems etc., that in reality truly effect a persons financial situation.
So is there a way to “beat the system?” Absolutely! This has nothing to do with cheating or manipulating. But a clear understanding of how your credit score is calculated will help you put forth efficient efforts to finding debt relief.
First of all, there is a difference in a credit score and a credit report. Everyone is entitled to a free credit report every year, but not their credit score.
The great thing is that there are 5 simple and controllable factors that go into giving you a credit score. Income is not even one of them! Some of the richest people in the world have the worst credit and some of the poorest may have the best.