Plain and simple, credit is king folks.. You can think of it as your digital identity or your digital reputation. Often your financial (and professional) success is dependent on it.
“You come at the king, you best not miss.”
-Omar Little, The Wire, Season 1, Episode 8
Credit can affect your ability to obtain certain credentials (ex. security clearance) as well as employment. Great credit opens doors. Bad credit won’t even let you in the building. Because of this, it’s imperative that we as minorities know what credit is and how to use it to our advantage.
What is credit?
Credit is short for creditworthiness or credit history. It is an agreement to exchange goods or services for payment at a later time.
Credit = IOU
Credit is not your money, it’s someone else. Thus your reputation of paying back that credit is recorded and is what is referred to as your credit history. It’s your digital street cred. The more you have, the more you can do.
Why do you need credit?
Do you want to buy a house? Do you need a new car? Do you want to rent an apartment? Do you want to be a lawyer? Doctor? Work in business?
If you answered yess, then you care about and need credit. YOU may not know what credit is, but credit knows about YOU.
What is a credit score?
Your credit history is reflected in a three digit score, also known as a FICO score.
Your score is based upon the following criteria and is weighted:
Who monitors your credit?
First and foremost, you need to monitor your credit. It’s YOUR reputation and a great score can dramatically change your life but so can a bad one. There are three major credit reporting agencies:
These three agencies offer credit monitoring services however most banks these days offer the ability to monitor your credit score directly from your online bank account. Additionally there are a number of self-monitoring services that you can signup for, however the best service for your money (free) is Credit Karma.
If you’re looking for a good review on credit monitoring services, we recommend you check out The 7 Best Credit Monitoring Services according to The Balance.
What to do if your score is bad?
Bad score is not the end of the world. However you should be aware of why your score is bad and how you can fix it. In general there are two ways to go about correcting a bad credit score:
- Do it yourself.
- Have someone else do it.
Either option is fine just know a good/great score doesn’t happen over night. If you’re going to hire someone, a great place to start, is to hire a financial advisor. Smart Asset has a great tool to find one in your area.
Lastly, we can all have great credit, we just need to come correct.
As always if you have questions or concerns regarding creating an emergency fund, investing, real estate, insurance, or planning for the future, don’t be afraid to speak with qualified financial advisor. Smart Asset has a great tool to find an advisor in your area or feel free to email me (contact@surgifi.com) to help you on your path to financial independence.
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