Credit And Credit Cards

Were you recently denied for a loan or a credit card? When you apply for a loan, there are only a few factors that actually impact whether you get approved not. A part of the decision is based on the information you submit to the organization, however a much larger portion of the decision is based on your credit score.

So, if you were declined for a loan, it is very likely simply because you have a bad credit score. The main way to get a bad credit score is to have a lot of open credit or to have had a lot of late payments (in some cases, no payments made at all).

Financial institutions such as banks, car companies, lending agencies, credit cards and many others use your credit score as a wage of your ability to pay off the credit card. Not only can having bad credit work against you, but also NOT having any credit can be bad.

You would think that not having debt would be a positive thing, however, if you have no debt, no credit card, then there is no way for the credit reporting agencies to track your ability to pay - so that is why it can actually be recommended to get a credit card with your name on it when you’re young (just make sure the limits are very low and that you pay off every penny on time).

The factors that work against your credit score are the following:

1. The number of accounts open
2. Any late payments
3. Any payments not made
4. Any reported liens against you
5. Any financial claims against you

Most of the larger organizations will quickly report you to the credit agencies when you fail to pay them on time. This is mostly there way of making sure you pay them, or else they can really hurt your credit.

The worst of it is when your credit report is hurting when it was not even your fault. Yes, identity theft and/or wrong reporting by a financial institution happes all of the time.

This is precisely why the government has made a law that allows you to see your credit report once a year at no cost from all 3 of the major reporting agencies.

So how do you improve your credit report?

1. Pay off as many debts as you can and close accounts.

2. Solving any disputes against you.

3. Checking your report once a year and making sure all claims are true - dispute anything that is false.

4. Never leave a credit card open unless you are using it - even if you have no debt on it.

5. Never make late payments.

Always remember that you can easily improve your credit rating even if it is bad right now.

Tags: bad credit, credit repair tips, finance, improve credit score, money

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