Posts Tagged ‘credit history’
If you have a poor credit score the cost of borrowing money will increase. Knowing what a credit score is, where it comes from and how to improve it is essential. In this article I’m going to explain some of the major tips that will enable you to do this with relative ease.
A credit score is a numerical representation of how quickly you might be able to pay off your debts and to what degree you represent a credit risk. In general terms a poor credit score means that lenders see you as a higher risk. As a result of this there will most likely be a higher cost put on your repayments.
The key thing is lenders will look at the numbers of debts that borrowers have. History has shown that very often people with more debts are more likely to fall behind with their repayments. It must be remembered that it is credit reference agencies that set a credit score. What you need to do as a borrower is a show lenders that you can easily repay money that they may lend you.
There is no doubt that having a good credit score is of real benefit to most people. One thing that you should always do is keep to hand the contact details for the various credit agencies. If you find a mistake in a credit report you may need to contact these companies. The major credit agencies are companies such as Experian and Equifax. Once you have seen your credit report and are aware of your credit score you will know when there might be problems.
The next thing you must do is try and develop a clear plan of action in order to deal with any problems. This action will be crucial in repairing your credit score. You will see see from your credit report where the problems might lie. There may be too much debt but perhaps you would have missed payments recently. It may be the case that you have been made bankrupt or suffered some other serious financial incident. Your credit history will have a serious and significant influence on your overall credit score.
Missed or late payments, defaults on loans and any bankruptcy will generally have the most significant effect on your credit history and lower your credit score.
Your current level of debt will also be significant. Generally the higher current debts are, the more likely it is that you’re going to struggle to achieve a good credit score. One thing that people often fail to realise is that you can have a poor credit score if you have too little credit or have had credit for a very short time. This is because lenders are unable to see if you have the ability to repay debts if you have not had any in the past.
Finally, your credit history and therefore credit score will also be influenced by the type of debt you have had. In general terms it is better for your credit score if lenders are able to see a mix of types. They like to see that you are able to handle the different types of debt such as a credit card, loan and mortgage.
When you receive your credit report and credit score, the first step is deciding where you stand and where your main problems may lie:
-Have you defaulted on a loan, failed to pay taxes, or recently been reported to a debt collection agency?
-Do you have too much debt?
-Too many unpaid bills?
-Have you recently faced a major financial upset such as a bankruptcy?
-Have you simply not had credit long enough to establish good credit?
-Have you defaulted on a loan, failed to pay taxes, or recently been reported to a collection agency?
The problems that influence your credit problems should dictate how you decide to start to repair your credit score. As you read this article, make a note of those tips that apply to you and from there develop a checklist of things you can do to improve your credit situation.
When you take professional credit help, counselors will commonly work with you to help you develop a personal strategy that directly confronts your financial history and credit problems. This article allows you to develop a similar strategy on your own in your own time and at your own cost.
When developing your action plan, know where most of your credit score is coming from:
1: Credit history (can account for more than a third of your credit score). Whether or not you have been a good credit risk in the past is considered the best indicator of how you will react to debt in the future. For this reason, loan defaults, late payment, bankruptcies, unpaid taxes and other debt responsibilities will count against you the most.You can’t do much about your financial past now, but starting to pay your bills on time – starting today – can help boost your credit score in the future.
2: Current debts (can account for approximately a third of your credit score). If you have lots of current debt, it may indicate that you are stretching yourself thin financially and will have trouble paying back debts in the future. If you have a lot of money owing right now, especially if you’ve borrowed a lot recently, this fact will bring down your credit score. You an boost your credit score by paying down your debts as far as you can.
3: The length of time you’ve had credit (can account for up to 15% of your credit score). If you’ve not had credit accounts for very long, you may not have enough of a history to let lenders know whether you make a good credit risk. Not having had credit for a long time can affect your credit score. You can counter this by keeping your accounts open rather than closing them off as you pay them off.
4: Types of credit you have (can account for about one tenth of your credit score). Lenders like to see a mix of financial responsibilities that you handle well. Having bills that you pay as well as one or two types of loans can actually improve your credit score. Having at least one credit card that you manage well can also help your credit score.
As you can see, it’s only possible to estimate how much a certain area of your credit report affects your credit score. But, keeping these four areas in mind and making sure that each is addressed in your personal plan will go a long way towards making your personal credit repair plan comprehensive enough to boost your credit score effectively.
The bad credit tag is one that follows us along. It becomes difficult to get approved for loans later on. Something that is as simple as applying for a credit card can become a problem. Lenders and credit card providers prefer to not take your business. It can be quite a miserable state of affairs when you have to keep convincing others about your creditworthiness but are not even approved for a credit card. At such a point, it is easy to lose hope. However, this should not be your attitude. You should take it upon yourself to rebuild your credit. This will eventually help you gain creditworthiness in the eyes of lenders and credit card providers alike.
Getting a regular credit card after landing up with bad credit may be a problem. Hence, it makes sense to apply for a card that is specifically for people with bad credit. The problem with such cards is that they charge relatively higher rates of interest. Their other terms may also not be encouraging for the person with bad credit. However, they are a step towards rebuilding one’s credit. Of course, one also has the option of getting rid of credit hassles for awhile. However, this would not really help in rebuilding one’s credit history.
Once one has landed up with a reputation of bad credit, availing of loans becomes a major problem. However, these days, loan providers have introduced a host of loans that are specifically for people with bad credit. It should not be very difficult to manage to obtain a bad credit loan. Yes, a bad credit loan is more expensive than a regular one, but if you are able to repay the loan on time, you would be doing your credit history a lot of good. With time and effort, you should eventually be able to go in for cheaper loan packages. Moreover, with a decent amount of looking around, you should be able to find a bad credit loan that is relatively cheaper.
If you are currently reeling under the burden of debt, you should see to it that you do not become a person with bad credit. Going in for a debt consolidation plan might be a good solution. This would place all your miscellaneous debt amounts under one umbrella, leaving you to pay off one single loan amount at a single rate of interest. Ideally, one should see to it that one does not put one’s creditworthiness at risk. Making budgets and making repayments on time are two ways by which one can protect one’s credit history.
Indeed, if a credit card is used properly, it can be the most powerful financial tool. But not everybody can afford all the expensive rates of most credit card issuers offer. This is where the low APR credit card ushers in—to help people who plan to maintain a balance on their account and not to pay the full amount monthly. But, what does APR stands for in a low APR credit card?
Basically, APR is the cost of credit as a yearly interest rate. APR stands for “Annual Percentage Rate” of charge can be used to compare different credit and loan offers. The APR on credit cards is usually calculated monthly based on the current amount in the card. The monthly interest is calculated as if the current card balance would remain the same over a year; the interest on the amount over a year (APR) is worked out and divided by 12 to give the monthly interest. It is a must that all lenders tell the client what their APR is before signing any agreement.
Although the arrangements and terms may vary from lender to another, it is better for people to avail a low APR credit card because the lower the APR, the better the deal for them to spend more money in shopping around.
Why choose a low APR credit card?
Low APR credit card is a good choice for those people who are into a tighter financial budgeting. Being the most important attribute of a credit card, APR determines the significant balance over a longer period of time.
In a low APR credit card, the amount of interest one must pay on his or her credit card balance depends on its APR because the lower the APR is, the better it is him or her because it means they have to pay less interest. APRs in a low APR credit card can either be “fixed” or “variable.”
If you are planning to have a low APR credit card, there are so many cards that offer low APRs that can be found online. These low APR credit cards are chosen using a factoring scheme that organized these cards by computing a number of their attributes to place the best deals at the top.
Some of the questions one have to ask when looking for a low APR credit card includes the charges—if they vary or a fixed rate; and if these charges are variable because it might affect the repayments and if these rate are fixed or will it stay the same. Searching for a low APR credit card may also include inquiries on the possibility of any charges that are not included in the APR like optional payment protection insurance or an annual charge. If there are any, make sure that you understand what they are and when do you have to pay them. Lastly, looking for a low APR credit card should include questions on the conditions of the credit and how would these conditions suit you.
If you are now seeking for a low Apr credit card you may begin looking for a scheme that could help you save hundreds in interest with a low interest credit card and low cost processing.
Most low APR credit card offers 0% APR for the first months on purchases, cash advances, and balance transfers. Through these, low APR credit card can warn rebates towards any item purchased. They also offer $0 liability on unauthorized purchases, and no annual fees.
Some low Apr Credit Card that have very good intro rate for purchases is recommended for those who would want to avail one. They also offer good deals if one carry high balances on other cards and need to transfer the balance.
Indeed, having a credit card can be useful and convenient, and can even help build a strong credit history that will help you with future activities like home-buying, paying for higher education, and even finding a job. But, before you apply for a card, consider the advantages and disadvantages especially with the current financial situation you are in.
Building a good credit history/repairing past problems. We have established that credit scoring tries to predict your behavior. If you do not have a credit history it is more difficult for lenders. The bottom line here is, if you do not have a credit history then you have a very high chance of rejection. If you have a poor, or indeed, no credit history here are a few ideas to help remedy this problem.
Expensive Credit Cards
Apply for a Credit Card that has an outrageous interest rate. Expect this to be 30% APR or more. There are many Banks out there that will accept your application for these types of cards.
Tip: If you decide to take a high interest rate card use it for up to a year, but spend very little each month. If you can use two cards to build a better credit score but.
Remember: Repay the FULL balance every month to avoid that high
interest cost. This is a useful way to help you move into the mainstream. This is also helpful if you have a bad credit history. After that, you should’ve built a credit history allowing you to move into the mainstream. This tactic is also useful for those who’ve defaulted in the past.
Don’t be late
The golden rule is Don’t Be Late and always pay at least the Minimum Required not matter what your situation. Any late or non-payment will immediately result in a bad credit entry and you will be right back to square one. If you do find yourself in a tight spot, contact the lender without delay. They are there to help. They do not want to see you default on your credit. The lender will take the stance that it is better to get some than none. Although this will adversely affect your credit score it is better than having a Court Judgment set against you. Set up a Direct Debit to repay either the balance in full or the minimum amount required by the lender. If you are paying the minimum try to set aside extra money each month to reduce the balance further. It will cost you less in the long run.
Joint Finances
If you are marrying or living with some who has a bad credit history this should not affect you as the other persons information will not be added to your credit file.
Beware : If you are linked financially, that is if payments are in joint names, such as the Mortgage or a Joint Bank Account this can have an impact on your credit history. If you or your partner have any bad credit history then the rule is keep your finances apart. If you were to separate you should inform the credit agencies and request a ‘Notice of Disassociation’. This will stop their credit history from having any
adverse affect on yours