In the last post, I talked about some popular ideas that many people have regarding their credit rating and how they get rejected for loans. Of course, we cannot simply leave things at that and not look at the other side of the coin. So here are some facts about your credit rating. These are the things that matter, things that you should actually look at and be concerned about.
You need some sort of credit history.
Some people think that just because they are not in debt, then they are good to go. Well, if they only use cash and never have to apply for a loan then probably, yes, that is true. However, if you want to get approved for a loan, then you need some sort of credit history. More than you not being in debt, lenders want to see something concrete. A good thing to do would be to have a credit card and use it from time to time and pay it off immediately. This way, you will have something concrete to show the lender and prove that you have a good track record.
Your current bills and balances matter.
Your credit report shows more than your history and your score. It shows what you owe at the time the credit check was run. So for example, if you have 3 credit cards and they are all maxed out plus you have other existing loans, it might not bode well for your chances at a loan. Potential creditors will look at your existing obligations to determine if you will still be able to pay off THEIR loan with what you already owe at the moment. So a good thing to do, before applying for a loan, would be to check your current balances and see if you can lessen them first.
Credit checks and applications matter.
I am sure you have heard of this before – running a lot of credit checks within a relatively short period of time is going to harm your record. Recent credit checks and loan applications are reflected in your credit report. This is usually not taken as a good thing by creditors. The more credit checks and applications you have in the past months, then the suspicions of creditors may be roused. They can either think that you are desperate (which is not a good thing in their eyes) OR that you are part of a fraudulent activity (definitely NOT a good thing).
Missed payments are bad!
Put yourself in the shoes of lenders – if you see that someone who is applying for loan has missed repayments for other loans, then would you trust that person to make ALL the payments for YOUR loan? I think not. That is why missed repayments are really bad news. It is very rare that lenders will overlook several instances of missed payments. The solution? It is very simple really, you just have to make your payments on time – no ifs or buts.
Author Resource:-
Nancy, the author of many articles regarding money and personal financeand is providing his useful advice through his articles on finance for the residents of the UK loans. Read more about payday loans.
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