Sunday, December 5, 2010

Why We Have Bad Credit?

Credit report, as its name suggested, is a report that contains all the necessary information that would be required to give someone a credit line. A credit report, is then used as a basic guideline to determine a person's credit score or credit rating. A person's credit report is very important for financial lenders when it comes to loan application. With a credit report, the lenders are able to know:

1) How reliable is a person doing his loan repayment?
2) How many loan is a person currently holding?
3) How large is a person's total loan at current stage?
4) What is the person's credit score or rating?
5) How many defaulted repayment so far in the loan tenure?
6) Any bankruptcy or illegal act record?
7) Etc...

Check your Credit Score - Fast, Free & Easy at

In today's raising expenses, many people are having bad credit simply because they cannot make their loan repayments on time. Sometimes, unexpected issues strike in our life and influence or cut off our income streams. That makes our normal loan repayment becomes more difficult or impossible to continue paying off our loan repayment especially those with many loans in hand. Once this unfavorable things happened, life becomes difficult and eventually makes ourselves fall into bad credit rating group.

Getting a loan is not so difficult, they are many financial institutions or lenders that are willing to offer loan to applicants who have average credit score. Sometimes, even applicants with poor or bad credit score can still manage to get a loan approved too. Therefore, it is advisable that we should control ourselves from taking any further loan if our ability to do repayment, or our loan over income ratio is more than 1/3.

If we are holding a bad credit and wish to step out from the bad credit group, we should discipline ourselves by having a proper financial management. Say no more to take further loan if our loan to income ratio is more than 1/3. If there is no choice and taking an additional loan is a necessity. Then, please remember that, a person with bad credit score will get a loan with a higher interest rate. Do more surveys in the market and try to look for lower interest rate financial lenders.

Secondly, for those with bad credit, try to use debit cards instead of credit cards. People who use credit card may have experience that, the credit card bills snowball to become a shocking huge amount at the end of the month. Consequently, paying off this shocking huge amount of credit cards bills with interest may not be that easy when we did not realize that we had over spent our money. If we are using debit cards to spend money, this so called "shocking card bills" will not happen.

Thirdly, it may be advisable for people with bad credit score to consider consolidate all the debts. This will help to proper manage the loan repayment without having to worry so much on different loans repayment date especially those with many loans. Debts consolidation is good because it helps us to manage or improve our credit rating by reducing the chances of missing any one of our loan repayment every month.

What’s Your Credit Score?

Lastly, we should always keep ourselves an updated credit report. Understand the importance of our credit report and know the way how to retain a good credit score will lead us to a proper financial management. Also, people with good credit rating will stand a better chance of getting a loan application approved. Moreover, a loan offered with a better interest rate. Therefore, don't hold a bad credit score anymore, do somethings to improve your credit today!

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