Example Of WSJ Chapter 7 Essay
Type of paper: Essay
Topic: Banking, Credit, Score, White Collar Crime, Monitoring, History, Identity, Theft
The article served as a guide in monitoring the credit score and credit report. It began with relating bad credit to unfavorable interest rates. Such record is reflected through the credit report. It summarizes one’s credit history, including their bank accounts and bills. Whenever an individual gets a mortgage, loan, or credit card, it would reflect in the credit history. Basically, a bad credit would hinder an individual from smoothly financing purchases and even affecting both personal and professional pursuits such as getting an apartment lease and landing one’s dream job. It is the credit score that gauges whether an individual is reliable or a bad borrower.
The credit score is measured through a formula considering the factors in the credit history and rank creditworthiness using a three-digit number. The factors accounted in the formula are the likes of payment history, amount owed, years of credit, new credit, and types of credit. The higher the credit score, the lower the interest rate is. This also means that an individual would have to spend less than the average in the span of the loan. The optimum rates are in the 720 score. The credit score is important, yet this is not the only consideration that lenders look into. Factors such as annual income and employment history are also included.
In the world of finance, everyone wants to be friends with the interest rate. As discussed, it can be done through having a good credit score. Gaining such a status can be difficult, especially with all sorts of financial demands, commitments, and consequences today. For this reason, people become protective of their credit records from threats such as credit card fraud and identity theft. From here, the article has expounded on the idea of credit monitoring. Credit monitoring is different from identity theft protection, although credit card fraud is a form of identity theft. Monitoring would not be able to completely stop identity theft and even unauthorized uses of personal records. Nonetheless, it helps in detecting problems.
Monitoring services can be provided through credit monitoring agencies. In any case, it is the individual’s responsibility to manage personal finances. In this regard, the article has shared some approaches to credit management. First is to review both bank and credit card statements. It is important to note that each transaction warrants the individual’s approval. One has to take note of them and compare with the statement. See if there is any unauthorized purchase and withdrawals. In checking the credit score, on the other hand, one may ask for it from banks or through merchants that the individual had previous transactions with. This is because the latter would also have to review the individual’s score before transacting again.
The most practical advice shared through the article when it comes to keeping a good credit is regulating the credit usage such as avoiding maxed out credit cards while still carrying unsettled balance. This can be done through the application of automated payments on bills so that they are paid on time. Another way to increase one’s paying capacity is through spacing out in loan applications. Make these a habit. The art and science of credit management was a lesson learned the hard way. The power of credit is blinding. We are enabled to purchase luxuries and are assured that we could just pay for them later on. However, when an emergency suddenly strikes, we have become less capable of affording the solutions.