How To Build A Lender-Friendly Credit Report
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How To Build A Lender-Friendly Credit Report
Often, we neglect the fact that the simplest way to have a clean credit report is to always pay our bills, and avoid being remiss with any charges due. However, the temptation of using credit is simply too seductive to resist at times, and before we know it, we’re neck-deep in debts already. Jesuit priests are famous for the saying “delay gratification.” We should learn how to put this into practice if we want to avoid uncomfortable predicaments every time the month ends.
In this day and age, having good credit has taken a new level of importance. It has always had the ability to affect your ability to get a car, a house, rent an apartment, or be approved for personal loans or credit cards. However, now more employers are looking at credit reports as part of background checks, and insurance companies are considering them when deciding whether or not to extend coverage.
Having good credit means you have established credit, which stated simply means that you have borrowed money or used a credit card and then re-paid it in a timely manner and not extended your credit limits. Additionally, it means not overextending yourself and applying for credit that you won’t be able to pay back. One little tip; don’t “shop” for credit because every time you apply for a credit card it shows the action as an inquiry on your report. Too many of those make you look like a high risk to other lenders!
During early adulthood when we begin taking in some responsibilities on our own, using a cellular phone and paying your bills on time is a good way to start building a good credit report. In addition, there are many special credit card offers for students and young adults specifically designed to get a credit history started, and using the card and paying it on time is one of the best ways to establish excellent credit. Paying more than the minimum payment, or even paying the full balance, is also a great idea.
You could also use car loan to further build your credit report. Most cars aren’t cheap, so by having a large balance and then paying it on time every month will do wonders for your credit. You’ll need to establish sufficient credit in order to be able to borrow money and finance the car, but making other payments on time – such as the ones mentioned above – and being sufficiently employed will allow you to do so.
Once you are empowered to avail of credit, you should be religious in monitoring your bills and debts. Request a copy of your credit report once a year, from each credit bureau. It’s important to know which of your accounts show up on which reports, and to make sure that they are all accurate. It’s perfectly alright to increase spending and credit as long you don’t overextend, and make sure to cancel any card you are not using immediately. If you find mistakes on your credit report, make sure to follow the bureau’s instructions to challenge it, in writing.
For as long as you follow the steps we’ve discussed here, your road to financial freedom would be clean, and achieving that AAA status on your credit report will be more than just a fantasy.
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