Eating healthier, staying active by finally going to the gym, and trying to have more time for yourself and family. Perhaps these are the improvements that you want to work on in 2018. That’s great but there’s one more important thing we thought you might consider focusing more on this year — your credit.
Why is Good Credit Important?
When you apply for any type of financing, a lender will always pull your credit and take a look at it. Reviewing your credit history and score is an essential part of establishing “creditworthiness.”
Your creditworthiness tells your risk level if someone decides to let you borrow money.
Also, it shows how well you manage your debts. It shows if you have been repaying that credit card bill on time. Moreover, a person who is creditworthy has income and liquid assets which are enough to cushion him or her during financial hardships.
How Do You Correct Your Credit?
Build (or Rebuilding) Your Credit
An assessment of your credit standing will easily tell if you have poor or insufficient credit. A low credit score may result from numerous missed payments, bankruptcies or loan defaults. It can also be caused by not having a credit history long enough to calculate a score.This means that the lender isn’t able to find enough proof that you can deal with a bigger financial responsibility in the form of a mortgage.
Bad credit is one of the most common causes of a loan denial. When applying for a mortgage, your credit can make or break your application.
Build your credit if you want to increase your chances of getting approved for any financing.
One way of doing this is by applying for a secured credit card. If you can’t qualify for your own card, have yourself authorized to be the user of someone else’s credit card.
If you have been irresponsible in the past when it comes to repaying debts, change your attitude and become more responsible for it. If you currently have missed payments on your loans, pay them and keep them current.
When you are able to build or rebuild your credit, your credit score will also improve.
Scrub Out Any Erroneous Entries
Mistakes in your credit history can hurt your credit score. Before a lender can take a look at your credit report, make sure you’ve seen it first. Erroneous entries can cause your credit score to fall. Lenders will see these errors and could take them against you.
Make sure that your credit report is free from any mistakes. If you see fraudulent collections, inaccurate accounting or any illicit transactions done under your name, correct it right away.
Have these entries scrubbed out so that when you submit the report to your lender, the document only reflects your true score.
Don’t Add Insult to Injury
If you’re already suffering from bad credit, do yourself a favor and stop maxing out your credit card.
Do not take any debt or loan that you cannot handle. Let your credit heal by trying your best to always be consistent in paying your other debts.
This may be a long and enduring process, but all your hard work will be worth it. Keep making full, on-time payments on your other debts. Eventually, lenders and creditors will see a pattern and will realize that you are doing something to fix your problem.Planning to refinance to a lower rate? Click here.
If you want to make 2018 a less stressful year for you, put some effort into correcting some long overdue mistakes. Your poor credit can be part of it.
Think of it as your resume. The only way to impress your interviewer is to make sure your resume shows your strengths. Remember that your credit report is one proof of how stable your finances are. It also shows who you are as a person.Click to See the Latest Mortgage Rates»