Your credit score is important. It can even have an influence on whether you will be successful with a job application because every employer will be able to access it if required.
Obviously the recession resulted in many people suffering, often defaulting on debts and seeing their credit scores fall as a result. If you have suffered this fate or if it is something you want to avoid, you need to follow some simple rules to understand the rules of the credit score game.
Tips to Understanding the Rules of the Credit Score Game
Pay on Time
If you fail to meet a bill on time you may find that you face a penalty, and your forgetfulness will result in a blemish on your credit history which will stay there for seven years. It may not be forgetfulness of course; you may be unable to pay.
If you have only been a few days’ late you may avoid the blemish, most lenders would not act for 30 days. If you can’t pay then you will certainly be getting that blemish.
Medical Problems
They tend to be unexpected by definition, at least initially. If you have no emergency fund it is likely that you will find difficulty in paying. That presents problems, certainly when you require ongoing follow up treatment. Your credit history will suffer too in addition to your credit score.
Credit Report Disputes
If you feel you have been overcharged for something and refuse to pay you continue to seek a resolution because simply ignoring demands will result in an entry on your credit history. It is possible that such an entry can be removed in the future once the problem is settled but why take the risk? It is better to pay so that your credit history does not suffer then proceed to make a claim to attempt to retrieve all or some of what you have paid out.
Co-Signatory
You may want to help out a member of the family or a friend and effectively decide to act as a guarantor. That decision can be costly and you must only go into such an agreement if you fully understand the consequences of your decision.
Even if repayments are made on time your own ability to borrow can be affected by your agreeing to support someone else. When repayments are late or simply not made, then the impact on your credit score is even worse.
Credit Cards
If you are close to your credit card limit then that can have a negative impact on your credit history even if there is not a great deal of money involved. If you have leeway between your balance and your credit card limit then you are certainly in a better situation.
Incidentally you can improve your situation by paying off any credit card balances which after all incur high interest charges by taking out a personal consolidation loan at a lower rate. If you have regular income and you can afford the monthly instalments for the term of the realistic quick loans you are likely to be approved. Just don’t build up a balance in the future; it is a waste.
Don’t Close Unused Accounts
You may think it makes sense to close accounts you do not need if only to be tidy. It doesn’t. If you have open credit lines then it will be a positive when it comes to your credit worthiness. Obviously if you are paying to simply keep accounts open and you have many of them, then you may decide to reduce them somewhat.
Regular Credit Reports
Never assume that everything is in order. There are times when incorrect entries find their way on to a credit report and they will make a difference unless they are removed. You have a right to free copies of all agency reports and you should get them and inspect them for errors. If there are mistakes the agencies have an obligation to respond to your queries.
It is cheaper to borrow money if your credit score is good. If you have had a problem then you should take action. That will likely include reducing your debts and the exercise described above to pay off expensive credit card balances should certainly be part of your plans. As you repay a loan on time those positive entries will help anyway.
In the long term those with a good credit score will find they save on many things; futures loans and insurance are two prime examples. It takes no time at all to think about your personal financial situation and take action where required.