You have many options available if you are careful about your credit score and better manage your outstanding debt.
Credit scores are checked for a variety of reasons. From credit card companies to auto dealers and even mortgage brokers, your credit score may be the key to whether or not you are eligible for certain services such as loans.
Here are 4 things that truly have an impact on your credit score, and what you can do about them:
1.Payment History
Your payment history gives lenders a better idea of whether you can be trusted to give back the funds if they approve your applications.
Bad payment history made up of late payments, or other negative events such as foreclosures or bankruptcies are a big red flag for lenders that giving you a loan may result in history repeating itself. If you have any loans, the best thing you can do to prevent this issue is to always make the payments on time.
2.How Much You Already Owe
If you make all your payments on time, the next thing a lender might consider is how much debt you still have and whether your finances can cover an additional loan.
In these cases, less is better, so the less money you owe lenders, the less affected your credit score is. You can postpone applying for financing opportunities until you’ve covered more of your outstanding debt.
3. Length of Credit History
The credit score also considers how long you’ve been using credit, such as how old your older account is or your accounts’ average age.
Long credit history is a good sign, especially if you have no late payments and other negative events in your history. Short histories aren’t necessarily considered bad either, but a negative event here holds a lot more weight. Consider keeping your credit card account open even if you don’t use it anymore to boost your credit score.
4. Your New Credit
The credit score looks at how many new accounts you have, or when the last time you applied for one was. The more new accounts you have, the more of a credit risk you’re considered because it can look as if you are experiencing cash flow problems. Many people open new credit accounts to cover the old debt, which is not a good strategy.
If you’re struggling with covering your debt, the best thing you can do is to talk with a financial advisor to learn more about your options.
The Better Rate Mortgage Team
Bad credit doesn’t always prevent people from securing financing, such as home loans. Still, you have many options available if you are careful about your credit score and better manage your outstanding debt. If you need some assistance improving your score or finding the best financing opportunities for you, please reach out to a professional loan officer for additional support and guidance.
