2/9/2020 0 Comments
Your behavior is one crucial factor that determines your financial well-being. It is not just what you know to do, but what you actually do that counts. Knowing you must save for retirement is different than saving for retirement. Knowledge should inform behavior not to be a substitute for it.
The next behavior in our look at six financially healthy behaviors is managing existing debt and has access to potential resources. This is your skills and ability to control your debt. And your capacity to generate outside resources in times of need. Let’s take a look at each.
Manages Existing Debts
If you have done some things right and your financial house appears in order, a relative will ask you to co-sign a loan for them. Co-signing is only one of the ways available to help your credit-challenged relative. There are other ways that may deliver the desired results with less exposure and risk for you, especially with a little bit of planning.
Let’s look at your options and so you can make an informed choice about co-signing. When you co-sign you become a JOINT account holder. Each and every member on a joint account agrees to be individually responsible for 100% scheduled repayment of the outstanding debt regardless of the other members' payments or promises. When you co-sign if a payment is missed, your credit score will receive the full negative impact of the late payment.
This could be catastrophic if it compounds an already diminished credit score. No doubt, the new co-signed loan’s high-balance-to-limit ratio, and short history have already reduced your credit scores several points. That happened just by signing up; missed payments or not. So be prepared to take a credit score hit when you co-sign.
How long will it take your score to recover from these factors assuming a pristine repayment history? The answer depends on several factors. Credit scoring is an art and a science. Whatever calculations the algorithm conjures to determine our scores, the following is empirically factual for every credit score. They go down a helluva lot faster than they rebound. It is never down one month; up the next for any credit scoring model in existence regardless of the previous history.
If your relative needs you to co-sign to “build credit” then you can also do that by making them an authorized user on your credit cards. If you do, you will almost immediately transfer your credit history to theirs. And without any risk or exposure to new debt for either of you. Now, this strategy will not work for impulse or emergency “gotta have a co-signer or else “ situations. But adding someone as an authorized user can be the gift that keeps on gifting. As with most successful credit score improvement strategies, the more time you give this one, the better.
But the gift isn’t for everyone. Here are six questions whose answers will help you decide if your situation is a fit for the authorized user strategy:
Good credit grandparents can leave good credit legacies safely to multiple generations since there are rarely limits on the number of authorized users. Just make sure that each of the six questions has the right answer.
There may come a time in a relationship, as things get more serious, the question, "what is your number?" may be asked. Of course, that question usually is only asked or answered in a serious relationship.
So assume, the relationship is serious enough to provide an answer. There is a decision to be made on how to answer. Self-inflicted shame and guilt may tempt you to be other than honest. What kind of number will be acceptable for your partner?
Does your past behavior contradict or affirm your stated goals/beliefs? Are you worried about what your number says about how you behave and what you believe? If you are going to answer, you should answer the question honestly.
An honest answer would be best if you decide to answer at all. By the way, if you can't answer honestly, you are not serious about the relationship or self-deceived.
So how should you answer the question, "What's your number?"
Get your mind off your crotch for a minute. I'm not talking about your body count but instead money. I'm talking about your savings number. Your debt number. Your income number.
Just as it is essential to know your partner's sexual behavior, likewise you should know their money behaviors. STDs are real. Avoid STDs, Sexually Transmitted Debt. Know your risk factors and resources.
If you are serious, here are some numbers you need to understand about your partner. Some may be deal-breakers. Maybe it's time to be tested.
Share and understand credit reports
Short Answer is that it dies with you IF.....
If you have bad credit be encouraged you can have good credit, if you want it.
Having a “prime” credit score can make a significant beneficial difference in your life. Non-prime credit scores will result in limited more expensive borrowing options, if available at all.
Borrowing from time to time is a reality and necessity of modern financial life. Short-term borrowing costs impact your long-term financial well-being. Your ability to minimize those costs is based on your financial capability. In this adversarial economic system, you can either "play the game" or "be played by the game."
Credit heals itself. If you do nothing on your credit for the next 7 years you will have a clean credit report by law. The only exception would be the 10 years required for a Chapter 7 bankruptcy to clear. But just waiting for the bad news to fall off your report isn’t good enough. You also need to engage the system for your benefit.