How Much Can I Afford to Borrow?
Current Financial Address-590 Credit Score Boulevard?
Should you move to a better Credit Score neighborhood? Financial “Relocation” specialists at Community Credit Counselors will assist you in determining the most realistic financial address for your personal income, lifestyle, and circumstances.
We encourage you to first be extra good to yourself. Our book, Paid in Full: Re-set Your Financial GPS for Goal-Powered Spending, helps you set the GPS to where you want to be located financially. Along with that location, your Credit Score could be considered your Financial address. If we key in your Credit Score your spending history would locate you in a neighborhood numbering from 500 to 990.
For example, if your Credit Score is 750, you could not expect to live with the same financial freedom as a friend with a 900 score. Yet, Credit Score neighborhoods, unlike communities, may have the two of you living side-by-side.
On the other side of your financial address you may have a neighbor with a 575 score. If we ran these numbers in sequence along a city-wide avenue, chances are the 575 would be in an older, low income district, 750 may be the “Good” part of town, and the 900 would be in new suburbs.
However, financial address is not as easy to measure as socio-economic address. Your neighbor with 575 may have the nicest house, car, and “toys” in their yard, yet not be able to borrow money for a toothbrush. The 900 may have the smallest house on the block, a 1995 Chevy, and little or no Bling on their property, yet have the financial capacity to purchase the whole block.
On Credit Score Boulevard, you can change your address and never leave the neighborhood. Yet, when you improve your address you at least have the Financial Freedom to leave the neighborhood. How do you get in position for that kind of Freedom?
Make a Vow to yourself by saying, “From this day forward I purpose in my heart to On-Purpose:”
1st- Pay my bills on or before the dates due for at least six consecutive months. I will set money aside immediately from my paycheck, write, date, sign and seal envelopes with the Mail Date where the stamp must go. Better yet, set all possible payments to Electronic transfer and note on a very visible monthly calendar the day each are to be drawn from your account. (ANY outstanding, overdue bills MUST be caught up whatever it takes. You may need to work some extra hours or jobs temporarily. No sympathy from me, I always worked at least two jobs. JUST DO It!
2nd- Stay as far under the Credit Limit on credit cards as possible. Each month pay at least double on what the finance charge is. (Your high score is calculated on the balance you are allowed to charge, NOT the amount you already charged. Once you pay a card off do not close it out. That is additional balance you have available to charge, right? Thus, your Score notches up a little higher.)
3rd- I will RESIST the temptation to open new cards and DO NOTHING TO DRAW NEGATIVE ATTENTION TO My CREDIT SCORE. (Whatever a clerk promises you about the “additional discount credited to your purchase for opening an account, if your score is already low, that simply puts more pressure on your Score and YOU for your monthly payment allotment.)
Wouldn’t you like to have back all the money you saved opening a new account! I ended up paying 10 times the amount of the purchase trying to save 15%! If it isn’t in your savings, You CANNOT, MUST NOT take the bait!As you work through these three promises, be sure to continue to –
- Check your Credit Report for negative or misreported items. Experian, Transunion, and Equifax are free and produce your VantageScore. The FICO Score which most lenders prefer runs about 150 points lower so be sure you distinguish the difference.
- Pay all accounts on time or early, and if you have to be late, Cable, Electricity, Water, Cell phone, and medical charge penalties but don’t usually charge interest on balances. However, pay ASAP to avoid any negative to your credit report.
- Contact our Licensed Counselors to discontinue harassing creditor and collection actions. We have various options to eliminate debt and the pressures of collectors, and provide financial guidance to stabilize and improve your financial ratings with or without a debt management plan.
Yes, this seems like a lot to do, but welcome to adulthood. Credit is an adult activity with relative consequences and responsibilities.