Have you ever wondered why it takes so much time before your loans are granted? There is a logical explanation for that and it happens because your lenders are trying to investigate your credit worthiness.
If you are new to how loans and debts work, you might be questioning how they do it.
But the answer is a no-brainer.
They just obtain a copy of your credit report and use it as a basis in calculating your credit scores.
What is then a credit score? It is just like a report card that you obtain when you were at school.
It has a list of items with their corresponding weight and the values are then added up to generate the score.
The higher the score, the better it is.
The lower the score, the lower the chances of getting good deals in loan.
In the real sense, no one has a perfect debt.
However, some people are responsible enough to keep them good for the benefit of their credit scores.
That is also the reason why they easily get loan grants and lower interest rates.
If you have been careless about your past debt performance, you will definitely end up getting disappointed with the interest rates you will be getting.
On top of that, you are prone to rejections in loan and rent applications.
However, it is not the end of the world.
You can do something about your credit scores to keep them high.
Just follow the tips below and you will surely get back on track on your next loan applications.
Know Your Own Credit Performance There is a possibility that a part of your credit report may be falsely reported or improperly documented.
This can highly affect your credit scores upon calculation.
What you can do is obtain a copy of your credit report.
You can do it online for your convenience.
Study the reports and identify inaccuracies.
Once pointed out, take actions and have them corrected.
Take care of you Credit Cards One of the most common forms of debt is the credit card.
With this in your pocket, it is easy to get tempted to buy whatever you want.
Since these cards are easy to mismanage, you need to control your spending.
Moreover, when you receive your bill, don't just pay the minimum.
Pay above what is required to keep your outstanding balances low.
Be prompt! Make Timely Payments Being on time on your payments does not only help you ease your financial burdens.
It also helps you improve your credit scores.
The way you handle your payments has the biggest weight in credit score calculation.
It is around 35% of the overall score.
Therefore, be prompt! Make timely payments.
Maintain Old Debts In Fair Isaac's scoring system, the longer you have the credit, the better the scores will look.
Therefore, one must avoid opening too much new accounts all at once just to increase the credit limit.
Limit Hard Inquiries Authorizing to much hard inquiries can affect your scores.
Having too many inquiries on your report would give the lenders an impression that you are a high-risk borrower.