It is everybody’s dream to become rich, and believe it or not, there are many easy ways to achieve said dream. One method is by simply managing your credit.
What is credit score?
This score is a number which indicates the credit-worthiness of an individual. It is majorly based on the analysis of said individual’s credit files and reports obtained from credit bureaus.
A credit score helps banks, money lenders as well as credit card companies to use this value to estimate the potential risks involved whole loaning money to their clients.
What is credit report?
This report includes a list of the entire individual’s basic identification information as well as a list of all his or her credit accounts.
Credit history is also known, taking into consideration a number of loans, to who paid, how regularly and late payments if any.
So how can this help you get rich? Here are a few ways:
- By improving your credit score, the amount of money potentially increases by a large figure.
- Lower-interest cards recommend attractive balance transfer rates. This saves you money as well as lowers the interest rate. All these offers are based on your credit score.
- Becoming a homeowner increases your credit score, therefore proving you to be a responsible client and spender. This provides you the benefit of a tax write-off and in the process, you have an asset that will appreciate over time. This, in turn, increases your net worth.
- Investing in profitable business opportunities can be done by using your credit to generate income in investments and properties.
- Starting a home based business venture has the added benefit of tax write-offs. But for a first-time business owner, financing will not be easily available unless your personal credit is stable and you should be able to borrow funds against it. One thing to keep in mind is that business credit is not achieved without having personal credit. Therefore, for a seasoned business owner or a newcomer, having a good credit score is essential for business, both in the beginning as well as the long run.
- There is a likely chance that a candidate with a better credit score might get selected for that jobs that you both had interviewed for. This might happen despite the criteria of qualifications. In today’s cut-throat world of business, a high percentage of employers check your credit score and report before the hiring process. Having a low credit score implies the lack of financial stability, responsibility and even honesty.
Credit is very often overlooked when people dream of becoming rich and instead they focus on fancy terms such as EBITDA and distressed securities. Their credit is therefore ignored when it is the simplest and basic way to achieve their goal.
Ironically speaking, an individual’s credit is the most imperative factor in getting rich. And taking a step towards the direction of building a good credit score in the era of the credit crisis will definitely go a long way in helping your finances.
