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How Good Credit Works

What is Good Credit? If you have been wondering how good credit goes bad, it’s actually a lot simpler than you think. Credit is fragile and it seems like all you have to do is sneeze and something happens to it to bring your credit score down. How good credit is established and maintained is entirely up to you and how you treat your bills, your credit card payments, and all of the other loans you take out.

How Good Credit is Ruined When you do not pay your bills on time or are new to the credit world and have an insufficient credit history, you are labeled as having “poor” credit. This isn’t exactly fair to those who have never had a chance to get credit, but that is, unfortunately, part of life. How good credit is obtained in this situation is by obtaining a line of credit with a higher interest rate and paying on it properly.

How good credit is ruined is also by not paying attention to what is on your credit record in the first place. Cases of mistaken identity and identity theft happen more often than you would think. By doing due diligence on your credit report, you can make sure that your good credit is not ruined by someone else’s mistakes, hardships or deceit.

Credit Score. In determining whether to approve your loan, your lender will check your credit score to see if you have good credit. If you don’t have good credit, the lender might still be able to offer you a new loan under an alternative credit program.

Appraisal. Often the lender will also require that the home be appraised to see how much it is worth. Your lender will set the maximum it will loan you as some percentage of the appraised value.

Closing. When your home loan process is ready to be finished, you will have a meeting for signing your final documents. This meeting will usually happen at a title company or attorney’s office, or could be at your lender’s office. Depending on the loan terms, you might have to bring funds to cover closing costs. After you have completed the closing, the mortgage will be recorded with the appropriate local governmental body and you will then be able to draw funds from it.

What are some other ways of getting bad credit? Here are a few more:

  • * Auto Repossession
  • * Delinquent Credit Card
  • * Lawsuits & Judgments
  • * Collection Accounts
  • * Foreclosure
  • * Unpaid Medical Bills
  • * Liens
  • * Late Payments on Mortgages

How Good Credit is Maintained You can keep your good credit by paying your bills on time, reviewing your credit report on a regular basis and challenging things that are not yours or incorrect, and reducing debt. How good credit is kept is up to you and only you.

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