October 14, 2017
We have all heard about the importance of credit score to acquire mortgage loans and other types of debt. This information talks about improving this score and making it easy for creditors and lenders to consider you as a valuable customer. But before we start exploring different ways to up your score, let us get a clear picture of where you stand financially. This will help you determine whether or not you need a loan in the first place. To evaluate your financial situation, look at several things in your life, including your income, investments, savings, living expenses, outstanding debt and available credit. Does it make sense to pay off those debt with your current savings? Does the new loan outweigh the benefits of interest from savings? Can you do without the loan? These are the questions that need answers. If changing your spending habits on a monthly basis can change your situation, by all means draw up a plan to accomplish it. A negative financial cycle that begins with mismanagement and carelessness is something that is difficult to break away and recover from. Not doing anything in the current situation can cost a lot of money, time and effort in the future.
Improving your credit score is an opportunity for you to get back on track financially. There are many ways you can increase your score. Some people turn to consolidating their balances onto one credit card. Unless you owe a significant amount of money in interest and fees, consolidating debt is a bad move. Why? Because maxing out a given credit card limit will put further strain on your credit score. Instead, try to pay off the high interest bearing loan with multiple low interest credit cards. You can also refinance mortgage or consolidate other types of debt to fix this immediate issue.
Another way to improve your credit rating is to take advantage of a seasoned tradeline. This is a line of credit that the borrower needs to hold open in order to improve his or her credit score. The longer the line of credit is in good standing, the better. Creditors and lenders are likely to take into account this type of debt when lending money. After completing various forms, they may even agree to a different interest rate. The way this account is handled is also a true measure of your credit worthiness. And borrowers can better understand and manage this account to achieve their financial goals.
Note that lenders and creditors are not your enemies. They are in the business to make profit. And if you are eligible for a flexible payment option even with bad credit rating, they are willing to work with you. All you need to do is communicate with them in a timely manner. Many lenders will understand the difficulties of financial situations and hence come up with appropriate repayment plans. In other words, instead of defaulting on a loan or skipping payments, try to work with the lenders and negotiate some form resolution.