Most people get loans to buy a house, start a business, or buy a car these days. Many students take out loans to pay for school. Your credit score, which is based on your credit report, will determine how quickly the loan is approved, the interest rate, and the amount approved. People with scores of 700 or higher get lower interest rates and quick punishments. If your score is over 700 and someone else's is 698, for example, the person with the lower score will have to pay interest that is half a percentage point higher. This means that a person with a lower credit score will pay USD 19,000 or more in interest on a loan of USD 165,000 over the course of a year.
A credit score looks at your payment history, how much money you make now, how much debt you have now, how long you've had credit, what kinds of credit you've used, and how new your credit is. If more than one person in your family has a job, you should apply for a loan together.
You can make sure your credit score is over 700 by taking a few easy steps.
- Make plans for your money so that it's healthy. Consider debt consolidation.
- If you are having trouble, talk to your creditors early and work out a plan to pay them back in stages. Ask the creditor not to tell anyone about the late payment.
- Don't close or open accounts all of a sudden. This makes people think you might be trying to change your credit report.
- Make sure your credit report is correct and doesn't have any mistakes, whether they were made by hand or by a computer.
- Make sure you have a long, good credit history. Be sure to pay all of your bills on time and keep your oldest credit card active. Never keep bills pending over a 30-day period. If you're in a pinch, pay at least the minimum amount due.
- Do not have more than you need. Learn to tell people "NO" when they offer you a free credit card. And make sure your credit limit is good. Don't use up all of the credit on the cards.
- Bills that aren't paid on time or late hurt your credit score, so always pay them on time. Keep track of when bills are due and make sure they are all paid on time.
- Learn as much as you can about credit reports and scores, and keep the criteria in mind as you manage your money.
- Keep an eye on the ratio of your debt to your credit limit, and if you need to, talk to a financial planner.
- Even if advised refrain from filing for bankruptcy. All you have to do is sit down and figure out how to cut costs, plan your income and spending, and don't spend money you haven't earned.
