Getting your application for credit rejected confirms your bad credit score. The resulting shock, frustration, and embarrassment push you to find ways of improving your credit score to get money for personal development or your business. Furthermore, being a poor credit rating means you get charged exorbitant interest rate being a risky borrower.
How Do You Get a Bad Credit Rating?
A missed credit card payment, either from being short on money or as an oversight as well as failing to honor other financial commitments such as bills, mortgage and personal loan and credit card will land you in this dark hole.
Having existing high debt also makes credit card companies and banks reluctant to lend you more due to uncertainty on your ability to pay. Although some factors vary across states and countries, applying for several loans simultaneously, and frequent change of residential address raise eyebrows.
You should increase your vigilance when getting into financial arrangements involving joint bank accounts, mortgages or loans. If your co-signing partner has a poor credit history or reneges on payments, it reflects on you by association and gets you listed as a liability by lenders.
Sometimes erroneous information could appear in your records by criminals taking out a loan in your name, or false information appears on the yourcredit report, which lowers your credit rating.
Check your credit score to ensure the accuracy of your credit report and point out any anomalies or suspicion of identity theft.
Improving your credit rating
Some smart ways to maintain an impressive credit rating include:
• Applying for credit for which you qualify. Before applying for any credit, engage in a quotation search, or use an online calculator, or consult a lending officer to know your chances before making a formal application.
In case you don’t qualify, you can walk away without making an application that will get rejected and get you listed or black marked as a bad borrower.
• Keep your personal information with your lender updated. When you change your names or address ensure your debts records bear those changes
• Avoid making too many credit applications within short duration as lenders interpret this desperation or a result of poor personal finance management
• Make debt payments promptly. Ensure you honor all your financial commitments, in the case of credit cards, spend minimal amounts, and keep paying off the balance for at least six months to avoid interest charges and accruing fees. Also, clear any outstanding defaulted payments
• When repayments seem overwhelming, negotiate with your lender for more affordable terms instead of defaulting. Explore ways of making debt manageable such as debt consolidation to improve your credit rating.
Cancel any credit cards and credit agreements you don’t use anymore
Amending YourPoor Credit Rating
Getting back on your feet after the emotionally and socially punishing effects of a poor credit score could include getting professional health. For instance, consider reviews for Lexington Law credit repair as a pointer on how such services could turn your situation around.
Before enlisting such help, analyze your credit report to confirm the kind of help you need. See whether you can clear your name without their help and if the credit repair company is allowed to do the things it claims to do, without getting you into more legal problems.
However, some people find that they have never applied for a loan yet their applications get rejected. Credit companies prefer clients who have records of paying off debt.Taking out a credit card and being consistent in your payments should get your credit score updated