Credit is becoming ever more important in this day and age. It dictates how much you can borrow, what you can borrow, the bank’s believability in you and it simply keeps you in good stead with lenders. The better the credit rating the less interest you have to pay back over longer terms because you are believed to be more reliable. Having a good rating can help any burdens you have because it means you can rely on it in times of need. However, there are things that can affect your credit and drag it down. There are certain things you can do, or indeed not do, that brings your rating down quickly. If you rely on a good credit score to do the things you need to do then you should pay attention to the things that could hurt it. There are likely more than you think. Some are easily avoidable, others less so. You should mitigate all hurt to your credit rating because it is important. It can decide whether you get favourable decisions from the bank such as business loans and mortgages, and also dictates what kinds of deals you can get with finance arrangements.
It can have the biggest impact through the medium of a mortgage. There are so hard to get these days anyway, without issues with credit, and bad credit can simply stop you getting a mortgage of any kind. Here are some tips to ensure your credit doesn’t take too much of a bad hit. They can help you manage your credit more wisely and ensure you don’t do anything that you could regret down the line. You may already know and practice some of them, but the others could help nonetheless.
Know What Your Score Is
You can’t keep an eye on your credit rating and know how it is doing if you don’t know what it is. You need to make sure you can see it so you know what is adversely affecting it. There are many ways you can do this. Call down to your bank for advice, they can help you access it. Or, the more easier way is using one of the many credit services online that can tell you exactly where you stand with a few clicks of a button. You need to check out each one before committing. See what they offer you and how they can help you keep an eye on your credit score. There are reviews of them that can help you make your decision, here upgraded points reviews creditkarma.com. Some you must pay for, others are free but will come with marketing add ons and advertising, so pick the one best suited to you. Being able to check your score is paramount, you’ll know exactly where it is and what you need to do to get it better. This is a useful service if you are gearing up for mortgage application or another kind of loan that you need. The first step in being able to influence it, or indeed protect it, comes with knowing what it is.
Keep Track Of Your Payments
You need to know when you are paying off your monthly outgoings. If you miss one, it affects your credit score in a really bad way because you are not paying what you owe. The best way to get out of this is by finding out when all of your payments are due and outlining them in a plan. You can then see when you need to pay them off. A calendar is a good idea. You should also do all you can to ensure that you can pay them automatically set up as direct debits. By doing this you take away the forgetfulness and it means you don’t have to worry about paying. Each time you forget a payment, it hits your credit rating and shows you as someone who can’t manage simply payment agreements. They will usually be fine to set up some kind of direct debit, just make sure it goes out on the same day that it is due to avoid confusion and more late payment issues. It could result in more than just bad credit, as some companies charge you more for paying late, meaning you lose more money. Keep track, and don’t let them catch you out.
Limit Your Applications
Credit applications for finance or loans hurt your credit rating. It is strange that they do, but it is just the way it is. If you make multiple applications over a short period of time your credit score will drop as a result. Try to do your best and find out what your score is before making an application. You need to be sure you have the best chances of acceptance before applying for something, because if it is a no, you will need to apply elsewhere, thus affecting your rating. This is true for both loans and credit cards, so be careful and limit the amount you apply for credit related items.
Defaulting On A Loan
This is one of the worst things that can happen to your credit score. You need to ensure you keep up payments. Missing payments is one thing but defaulting altogether is something else entirely. This means you never held up your side of the contract. If you loan was secured against your house then it may be repossessed. You should do all you can to stop it coming to this. Consider trying to come to an agreement with the bank. You may be able to negotiate smaller monthly payments of the loan. Or even a freeze on the loan. Do all you can to stop it getting written off, even if you have to get another consolidation loan. These are loans that you can use to pay off existing loans if you can’t pay them, make sure the consolidation loan is of a lower monthly rate so you can afford it.
Maxing Out Cards
If you max out credit cards it hurts your overall credit limit, which in turn impacts on your credit score. You need to make sure you don’t max them out, try to pay them off before they reach their limits. You should also be weary of the limit on certain credit cards. If the limits are high, this could impact on your score simply because it takes up some of your overall credit. If you have high credit card balances relative to your overall credit limit your score will drop. Try to limit the balances as much as you can and keep them in line with the amount of credit you have.
These are debilitating beyond belief and will stop you getting any kind of credit for as long as the judgement is on your account. It happens when a collector has tried everything but you still haven’t paid. A judge rules on your case and you get essentially struck off for a certain amount of years. You need to stop these as best you can because they last for around six years depending on the amount borrowed and owed. It will stop you getting a mortgage, or further loans in the future. Also, it will show on your credit rating for a long time after, meaning it could sway lenders decisions against you. You get mitigate the damage by paying it off as soon as you can, which means you have a paid judgement on your account instead of an unpaid one. It is still bad, the best bet is dealing with the issue before it goes too far. Ensure you keep an eye on your letters and know exactly where you stand with each lender. You can normally work out a repayment method that sees you pay more manageable lump sums, they, just like you would rather keep it out of the courts.
This is bad, but not the worst. It is where there is limited credit history on your account and as a result banks do not know whether they can trust you or not. Sure, you have no bad history, but there is no good either and no evidence that you can see financial agreements through to the end. Before embarking upon any kind of mortgage or loan application consider your score. If there is nothing on there think about getting something on finance over a short period of time. You can pay it off fast and have a closed account on your history which proves you know how to manage these agreements and can pay them off in the agreed time frames. If you don’t want to do this then get a credit card. Buy little things on it each week and pay it off straight away. The faster the better. This will also improve your credit rating and fast. Showing you can manage a credit card will go far in the eyes of those making the decision. Just ensure you keep tabs on it and make the payments on time, otherwise you’ll have some of the aforementioned issues.