Credit & Credit Report. What is Credit and why do you need credit?

Credit & Credit Report. What is Credit and why do you need credit?
Summary: Webster dictionary defines credit as: "Reputation of trustworthiness; Influence derived from the good opinion or confidence of others..." In other words, credit is the amount of financialinfluence a person possess.
Article: Wherever you live in this crazy world of genocide, suicide, murder, rape, or other crimes of human against human, or adults against children,... when every religion claims and repeats to enforce the same ideology that "we are all brothers and sister", credit is the "ideology"/concept of living a better life. It does not mean that credit or money will bring happiness but it provides us a better lifestyle. With credit, you can buy a better car than an embarrassing clunker we may drive. It allows us to have roof over family's heads, gives us opportunity to own better furnishings, and so much more. The concept of credit is practically saturated in our lifestyles to the extent that we cannot draw a distinguishing line.

Have you ever heard your parents or grandparents tell you, "we used to go to the grocery store down that street, picked up whatever we needed and if we didn't have money to pay right then, we would ask the store owner or manager to add the items to our bill and next time we come in, we'll pay the bill..." It was a trustworthy relationship (as described in the credit definition-above) people had a few decades ago. However, that type of trust seems to be a thing of the past. Now, we live in a bigger, more crowded, and distrusting world. Most to all of those mom and pop stores have been closed, become major corporations or that the employees' and managements' "ideologies" have changed. It is also because some of us have abused the "Trustworthiness afforded to us by others." Although some utility companies may still apply some concept of the old school credit and trust us; however, they still request a cash deposit or ask to see our credit report in advance of connecting our services, which takes us to the next paragraph.

What is a Credit Report? As a result of the changes in our lifestyles, distrust and other issues discussed in the paragraph above, for profit companies (Equifax, Experian, and TransUnion) have been established to obtain, process and hold our history of trustworthiness ("credit history"). These companies, which are called credit reporting agencies or "credit bureaus", have been receiving our credit history, accumulating, holding and processing them into an organized, readable format (called credit report) for others who are willing to lend us money (Creditor). Therefore a credit report is a collection of your payment history for loans and credit cards of over the past several years. As a result, whenever you want to purchase something using Other People's Money (OPM), the one who wants to lend you money or extend credit in some fashion, would want to pull-obtain/retrieve your credit report.

Note: Since we mentioned "several years", lets make this phrase clear. a. If you opened an account and the account is still open, then it will be reported on your credit report (also called "credit file") from the date the account was opened... now read b. b. When an account closes, it still remains and reported on your credit report for yet another seven years. c. Now if the account was in good standing and closed that way, there will be a note/comment on your credit report (on the last line of the history for this account) that will say, "account closed at consumer's request." However, if the account was in default (you missed payments and the creditor was forced to close the account) then, it will state, "account closed by credit grantor." d. If the account has a balance and was not paid at the time it was closed, then depending on the type of account, it will report serious negative on your credit report such as "Collection," "Charge-off," "Repossession," "Foreclosures," or some other adverse wordings (depending on the type of account you were holding. (For more in depth information, please read the book called, "Your Credit = Your Life, Fix It Now!" e. Whichever type of accounts you may have (whether good or bad), it will NOT be reported for more than sever years on your credit report, UNLESS, you file bankruptcy and include some accounts in your bankruptcy petition; therefore those accounts will be reported longer (based upon the type of bankruptcy filed).

Why credit repair is important? First let's make something clear. Although a lot of credit repair companies want to mislead you by making you to believe creditors and credit bureaus are horrible devils from "hell", the truth is that mistakes can be made by all parties. The same way that we may make a mistake and forget to pay a bill on-time (once or twice), the creditors may report inaccurate information by mistake. There is no law broken. However, the law is breached when a creditor or a credit bureau does NOT want to fix the mistake, argue with you or abuse their discretion. As stated in the last paragraph of "What are Credit Bureau's Responsibilities?", a bureau is responsible to report accurate information and any evidence of inaccuracy must be resolved in favor of consumers. This includes when a creditor or a collection agency does not reply to the bureau's request for correct information. See the book mentioned above.

The way the credit system works is similar to the court system. You are presumed innocent until proven guilty. However, in the court system a person that is charged with a crime, is arrested, taken to jail, finger printed, booked, a bond is set (in most cases), then released on bond until a later date when through a series of court hearing the person is proven innocent or guilty. Although most credit repair companies want to make you believe that the credit system works in the reverse order, this is not true and do NOT be deceived. As I stated above, mistakes can take place by both (your creditor and or the credit bureaus). It is your job to look at your reports, find the inconsistencies and contact the bureaus or the creditors to resolve the issues. Discussed in the resource mentioned.

Sine the inconsistencies can take place accidentally or inadvertently, no one can be blamed UNLESS you notify the party who made the mistake and no corrections are made. Some credit repair companies use scare tactics concerning credit bureaus to get your business.

Financial Planning & Money Management -- Does Your Retirement Plan Take Into Consideration "who You Are?"

One of the biggest challenges we all face is planning for retirement. The future is impossible to predict, and the further away we are from retirement the more difficult it is to determine what our financial needs may be when the time comes. A comfortable retirement depends on knowing how much money you'll need -- but knowing how much you need also depends on knowing who you are. "One size" does not fit all.
Are you a big spender? ...If you expect to enjoy your retirement by traveling a lot, for example, then you'll need a pretty sizable nest egg. Or, if you want to move to a more expensive location so you can be near the golf course, by the lake, or at the seashore, you'll need more money for that, too. It goes without saying: the bigger your retirement dream, the bigger the bank account you'll need.

Are you a workaholic? ...While it may be an attractive thought, the idea of not working for the rest of your life may actually make you miserable. Retiring at a later age or maintaining some kind of part time work in retirement may be better for you.

When did you start saving for retirement, and how much are you saving for it every year? Obviously, the sooner you can start saving the better... It is always wise to start saving and investing for retirement as early as possible and to allocate as much money for it as you can along with saving for your other, more immediate needs. This is especially true in today's world of dwindling pension plans and faltering Social Security & Medicare programs. Maximizing contributions to qualified retirement plans during your working years that offer tax-deferred growth, such as 401k plans and IRAs which can provide a variety of investment choices and diversification, is essential to maximizing long term growth of your retirement savings... But what kind of investor are you? What types of investments suit your personal tolerance for risk? Typically, the greater the potential return on an investment, the higher the risk. The lower the potential return, the lower the risk. The younger you are, the more risk you may be able to take. But the older you get, the less risk you may be willing to take. Your choice of investments depends on your answers to these kinds of personal questions. You'll want to be able to sleep at night while you let your money work for you, both before and after retirement.

If you are the kind of person who likes to live for today as if there's no tomorrow, then your current spending habits may require you to save a lot more the older you get. On the other hand, if your personality is such that you tend to save money wherever or whenever you can, you're more likely to have saved what you need at an earlier age.

Whatever the case may be, no financial advisor or consultant can tell you who you are. No one knows you better than you know yourself. Planning for retirement is as much of an art as it is a science. The "science" is about financial awareness, knowledge and discipline. The "art" is about personal awareness and how you apply your financial knowledge and discipline.