Jul 18 2011
Steer clear of bad credit score to avoid being turned down by lenders
An individual’s past ability to handle his payments and repay a borrowed amount is known as his credit history and in most countries, banks, lenders, landlords, insurance companies and even employers check your credit report before lending you a loan or hiring you into their organization. Your credit score is just like a passport to a house, a car or any other major purchase. Just like you need to have a basic bank account to start off with the process of banking and saving money, you must also learn the basics of repairing your credit score in order to emerge creditworthy. With a good credit score, you will not only get the amount of money that you want but also grab the loan at an affordable rate. Check out some ways of avoiding a tarnished credit score.
- Making timely payments: You must be using multiple credit cards and if you’ve already inculcated the habit of making late payments and forgetting your due dates, you’re perhaps digging your own grave. Most credit card companies charge you with a hefty figure if you make a payment that is even late by a minute or two. Such penalties and late fees unnecessarily increase your monthly payments and also negatively impact your credit score.
Don’t get close to the credit limit on your card: Suppose you’re using a credit card with a credit limit of $4,000, make sure you don’t shop impulsively and get up to $3,999 as this will adversely impact your credit score. Even though you repay your bills each month, it is pretty difficult to manage your score.
- Pay your bills in full: Despite suggestions from credit card companies to pay the minimum monthly payments only, you must always be aware of the fact that making just the minimum monthly payments will trap you in the vicious cycle of credit card debt in the future. This cycle of soaring high-interest debt hurts your credit score and lowers it. Save enough money so that you’re able to pay off the balances in full every month.
- Don’t open too many liens of credit quickly: Getting various new lines of credit is good but you must be tricky at the same time. Taking out a credit card, a mortgage loan and a personal loan at the same time will create an impression that you’re digging yourself deep in debt. Instead of creating an unfavorable impression, you can try and space out your requests by 6 months or 12 months in order to soothe the lenders and also boost your credit score.
Thus, if you’re in the market for getting a new line of credit, perform a credit check. Take the necessary steps to boost your bad credit score and emerge creditworthy to your lenders. Secure the best loan in the market and facilitate your loan repayment procedure.