Clean Up Credit Scores for Better Loans

Filed under Credit

It is certainly not as easy as it used to be to get approved for a loan. Due to various upheavals in the economy, many have suffered from less than stellar impacts on their credit score. No one is willing to hand over credit for average scores anymore. Anyone who requires a personal loan with low interest rates will need to have a good credit score. Needless to say, this means it is important to take a few simple steps that can help boost and clean up a credit score back to a helpful level. Here are some strategies that can easily be employed.

Credit Score Clean Up Tips

Order a copy of your credit report and score and examine it to make sure all information present is true and accurate. Yes, it can be tough enough to deal with cleaning up a credit score that is accurate. The presence of inaccurate information simply compounds the problems and does so in an unnecessary manner. While the odds are against you that inaccurate information is present (and that is a good thing), mistakes do happen. Locating them and removing them from your credit history will ensure these problems no longer plague you. Once you have these errors, make sure to dispute them with creditors. Disputing credit report errors is a very quick way to clean up credit scores.

Do not be late on any future bill payments. Whether it is your cable bill, your utilities, or your credit cards, you need to remain timely on all your billing payments. When you are late or miss payments, you will discover your credit score slipping. Why contribute to such a scenario? Pay your bills on time and avoid such problems.

Pay more than the minimum balance on credit cards. For cards that are reaching their maximum limit, pay off the amounts so it does not exceed 50-60% of the total. These numbers are only guidelines but optimally, your card amounts should be in the 20-30% usage range of a credit card.

Keep the balance on your credit cards as low as possible. Yes, this is easier said than done but it is an important point. Credit scores are impacted by the amount of debt you have vs. your available credit. When your debt is piled high and you have maxed out your credit cards, your credit score will suffer dramatically. As such, it is best to keep your balances as low as feasibly possible.

The sooner you work on these credit card score tips, the sooner you will having someone lending you money.

Tags: Credit Score Clean Up Tips

Lending Money with Good Credit

Filed under Credit

With almost every lender around the nation tightening their credit qualifications for loans, those applicants with good credit may still have problems getting approved for money they need. Lenders are placing stricter requirements for lending loans since the rate of default has increased, primarily due to unemployment rising.

Since lending began, lenders have been focused on credit scores that are issued by credit reporting agencies, such as Experian, Equifax, and TransUnion. The Beacon score is popular with lenders; however, a credit score is not the only factor in consideration when someone applies for a loan. Today, an applicant’s character, capacity, and collateral come into effect when underwriters are making a decision on whom to grant credit.

Importance of Good Credit History and Scores

Credit score and credit history can help determine an applicant’s character. These two factors who how the applicant has maintained his or her credit in the past, which is a predictor on how he or she will maintain his or her credit in the future. Underwriters will look to see if accounts have been paid on time, the credit limits on the accounts, whether the accounts were single or joint, as well as how long the accounts were open.

An applicant’s capacity can be determined by his or her income and debt-to-income ratio. An underwriter will investigate how long the applicant has been on his or her job and whether he or she can afford to pay the existing debt that he or she has. In this current economy, having a very high credit limit is a risk that lenders cannot afford to give up. You can expect banks and creditors to cut those limits if you cannot provide enough documentation to prove your income and ability to repay.

An additional factor to consider is using up a majority of your credit, over 50% – 70% when asking for someone to lend you more money. Any sign of risk towards the creditors will affect lending decisions.

Lastly, collateral will be assessed to determine if the applicant has anything to secure the loan. If the applicant is risky for the lender, the lender may require collateral, such as a titled automobile or mortgage.

Those applicants with good credit may not have an issue with getting a loan as long he or she has the capacity to repay the loan. For someone who wants a low interest rate loan, your credit history and repayment ability has to be exceptional.