There are so many reasons why people take out loans – it may be for a new car, a new home or to provide start-up business capital. There are also students who take out loans to alleviate the burden of paying tuition. Your credit score, which is culled from your credit report would be the main determining factor as to when your loan would be homologated, the amount thereof and the interest rate thereof approved by the financial institution. Loans get approved quicker for people with a score of 700 and up – they also qualify for lower interest rates. Take for example somebody has a credit score of 701 and his friend has a score of 698 – the latter individual will have the onus of paying an interest rate of half a percentage point higher. And, this means over a year a person with a lower score will pay $19,000 and more as interest on a loan of say $165,000.
There are several ingredients that make up the bouillabaisse known as a credit score, including present income, present debt, overall payment history and the length thereof, types of credit used and new credit. If two or more members of your family are earning then apply for a loan jointly.
We have narrowed down the long list of tips for getting a credit score of 700 up, and here are ten of them explained concisely.
Maintain a long healthy credit history. If, assuming you opened your first credit card in the 1970s, you need to keep that open (you are a long-time member anyway) and make timely payments on all bills. Do not let your payments default for over 30 days, if there is not a choice. If in a crunch at least pay the minimum charges due.
Do not have too many credit cards. Learn to resist the temptation of applying for a free credit card. And, maintain a good credit limit. Do not “max it out” or even come dangerously close to it as this could be deleterious to your credit score.
Make sure that you are always looking at an accurate credit report free of any errors of the numeric or typographical variety.
Have a financial plan that ensures fiduciary health. Debt consolidation might help.
Do not abruptly close or open an account. This leads to suspicion that you are trying to manipulate your credit report.
If in the event you are having difficulty paying, humbly request that your creditors hammer out a stratified payment plan. If at all possible, ask your creditors not to report your late payments to the credit bureaus.
Even a one day delay in your payment is reported and can cause your score to go down, so make sure all your bills clear in advance. Mark your different due dates on the calendar so that way you do not have an excuse for forgetting.
Do some productive reading on the machinations and ramifications of credit scores, as well as the different criteria involved in computing them. If the situation warrants it, hire a financial advisor, and always keep in mind the debt-to-credit limit ratio.
Do not file for bankruptcy even if you are pressured into doing so. All you need to do is to sit down and curtail expenses, plan you income-expenditure , and avoid spending what you have not earned.
If you are considering bankruptcy Canada, consult a professional. We can answer all of your bankruptcy questions and find a solution for your situation.