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What You Should Know About Credit

When it comes to your finances and your credit report, what you don’t know can hurt you. To help you avoid financial pain and frustration, this blog will share what you should know about credit.

Have you have ever gone through any type of credit re-building? If yes, then you know that it’s not an easy task. The more you know about your credit, the more prepared you will be in the re-building process.

In our previous blog, we talked about the three different types of credit and how they impact you. There are credit cards, personal loans, collateralized loans, home loans, etc. All of which will/can impact your finances differently.

Let’s take a look at what you should know about credit to strengthen your financial journey. We want you to be equipped with the knowledge you need to make sound credit decisions that will benefit you throughout your life.

Know What Affects Your Credit Score

To start, you should know what will and won’t affect your credit score. For example, the simple chart below shows the five factors that most affect your credit score.

Credit Impact factors by Percentage_Empowering the Possibilities

As we can see from the chart, our debts owed have a significant impact upon our credit. Still, there is always the possibility of having too much or not having enough debt.

Know About Your Credit Score

Having too much or not enough debt can have an impact on your credit score. This may determine whether or not you are approved for credit. You can learn more about credit scores here, at our blog on  what is the perfect credit score. It will help clarify what you should know about credit, with respect to your individual score.

The short video below will further help you understand the basics of credit scores.

Know About Your Number of Credit Cards

There is no such thing as too much credit, but interestingly enough, you can have too many credit cards. Let’s explore the issues of having too many credit cards and how it can affect your credit.


Having too many credit cards, even if you don’t use them, could have a negative effect on your credit score. And this can make you seem to be a liability to creditors. To lenders, you appear risky when you have too many credit cards.

Too many credit cards can also make it harder to keep track of your payments. This can cause you to make payments after they are due.

Of course, losing track of credit payments and making late payments can cause your credit score to nose dive.

Opening multiple credit card accounts within a short time frame can also have a negative effect on your credit score. If you intend to have a number of credit card accounts, ensure that you open them at least a few months apart. And be sure to keep track of your spending and payment due dates.

Whether you are using one credit card or many, if you are using more than 30% of your available credit you could be causing your credit score to drop.

Know About Too Little Credit

The flip side of too much credit, is having too little credit. Having too little credit can also be a hindrance to your credit score, as well. There are many ways you can end up with too little credit.

For example, in instances where you are a young adult taking your first venture into the financial world and you prefer cash and/or debit cards exclusively over credit cards. Yes, it is good to have the cash to pay off a purchase. But doing so, all the time, will mean not building any credit history that can help you with large financial purchases later.

Although these instances can cause you to have little to no credit history there is still hope.

Know About Secured and Unsecured Credit

Having too little credit can cause you to not be eligible for an unsecured credit card. But do not despair, you can still qualify for a secured credit card, in this instance. According to The Balance, with an unsecured credit card, “the issuer doesn’t have a security deposit they can take if you don’t pay your credit card balance. Instead, the creditor’s options are to take further collection efforts.”

Secured credit cards can be used as a stepping stone for building your credit.

To clarify, Investopedia shows that a secured credit card, “is a type of credit card that is backed by a cash deposit from the cardholder. This deposit acts as collateral on the account, providing the card issuer with security in case the cardholder can’t make payments.”

These type of cards are usually reserved for limited-credit borrowers–or subprime borrowers.

Be careful not to let the excitement of finally owning a credit card influence you to splurge and over spend. It is important to take note that most secured credit card issuers report your card usage to credit bureaus.

Once you are diligent in paying your secured card fees on time, you should be able, over time, to qualify for an unsecured credit card.

Always remember that you want to make sure that there is a balance in your credit and your credit history shows consistently good credit practices and habits. This is an important step in achieving a stronger credit score so lenders won’t view you as a liability.

Secured credit cards or loans is an excellent way to establish a stronger credit history.

As implied in the name, if you are unable to pay your credit card payment, the secured funds are there for the creditors to access and pay off your debt. When the funds are used to pay off your credit card debt, it will be reported to the credit bureau as a paid debt.

Know About Rebuilding Your Credit

Even with access to an abundance of information, sometimes individuals don’t get it right.

If you have managed to significantly weaken and lower your credit score, there is help available for you. Most financial institutions have a credit repair program to help you build or re-build your credit.

Credit repair programs are where institutions help you to establish or re-establish your credit by allowing you to get a secured loan or credit card. Empowering the Possibilities is one, of a host of, credit repair companies that can help you to rebuild your credit.

On our about page, you can see the various services offered that can help you to begin the process of rebuilding your credit.

Empowering the Possibilities_Services








These six areas of what you should know about your credit, can help you to become financially successful. Whether beginning anew, looking to strengthen existing credit, or repair poor credit, you should make it your business to know these points.

To learn more, feel free to contact us and we’ll be glad to help.

You can also reach out to Empowering the Possibilities on Facebook. And, of course, if this information was helpful to you, please be encouraged to share it with others, and follow/subscribe to our blog for more insights to support your financial success.

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