When we are undergoing a financial crisis due to a job loss, adverse business situation or death of a family member, naturally our credit rating will fall considerably. It is considered to be bad credit. You will know better that you are in a bad credit situation, when you approach a bank. This bad credit situation will affect your credibility before the bank, they will deny you from having a loan from them. So, you won’t get an auto loan, or a mortgage. But, if there is a problem there must be a solution. You will now slowly searching for an alternative.
In order to maintain a top notch credit score you will need to have a payment history free from late payments. Always pay all your bills on time. Creditors will report your payment history to the credit bureaus. One of the most important factors that are used to determine your get credit score is your payment timing. Do you pay all your bills by the due date? Or do you let them go past? Those who always pay on time no matter what will maintain the best possible score.
Request a copy of your credit report and look for any errors that damage your credit score. This is the quickest and simplest thing you can do. If you find any errors that cause damage to you as a borrower, you should report them immediately and ask for them to be fixed as quickly as possible.
Moving/traveling: If we move around a lot, the danger can be ending up with defaults on our credit rating due to unpaid accounts we were not aware of. Typically an account gets sent to our previous address and remains unpaid and then listed as such on our is credit karma safe file. We should consider a P.O. Box for all our mail or alternatively a parent’s address.
Bankruptcy can stay on your credit report for ten years, but the older your bankruptcy case is, the better your chances for credit are. If you successfully complete your Chapter 7 or Chapter 13, those debts will be eliminated from your credit report (though it will state they were discharged in bankruptcy), so your credit score will increase slightly within months after your discharge. Also, within about six months from your discharge, you will get credit card applications in the mail, though you will be paying a higher interest rate than normal. But if you get a low balance credit card, something you can pay off each month, you can use this card to increase your credit score. Simply pay the balance off each month and on time; this good payment history will be reported on your credit report.
Be aware of excessive credit enquiries. If we are not sure about our credit health, we should get it checked before applying for new credit. Declined credit applications on our credit report can hinder our chances of obtaining a loan. Some lenders are rejecting loans for as little as two enquiries in 30 days, or six enquiries within the year.
New credit means brand new accounts recently open. You do have to start somewhere, but build slowly. If you have just applied for 10 credit cards, banks tend to assume the possibility that maybe you’ve lost your job and are in need of a back up plan. Try to start with one small line of credit and build from there. Make sure that you can handle the payments consistently, are never late, and keep your balances as low as possible, or completely paid off.