Wednesday, September 11, 2013, AM | Leave Comment
Due to the present economic instability most of us have to take help of the different financial alternatives like payday loans, instant credits etc. and often we fail to pay off the credit within the given time frame. This, in turn affects our credit report adversely, as a result of which you don’t get a loan from the conventional sources like that of banks or other financial organization.
The banks usually ask for credit reports from the three different credit bureaus and if your financial history is not so fair or if you have a poor credit rating, it is most likely that you won’t get an approval for the loan.
Your credit history is what determines whether you will qualify for a car loan, home mortgage or a a credit card. Hence it is important to improve your credit score or build it from scratch, which you can do by following certain strategies –
Open a bank account
Among the many ways creating a bank account, before applying for the first loan, is a good option to build your credit. It makes the lenders convinced regarding your financial responsibility.
The best thing about this is the information of checking and savings account is not mentioned in the credit reports, but lenders request for these most of the time for the credit card applications.
The lenders would like to know if you have experience of few years of handling money and if you are regular with the deposits and withdrawals. They would also check out if you have source of regular income.
Consider your credit reports
As it is known to all, in the United States, the credit reports of all the citizens are maintained by three major credit reports – TransUnion, Equifax, and Experian. If you have never applied for any form of credit, then probably, you should not have any open file with any of these agencies.
Make sure you check out with all the three agencies if there is any false report on your name, before you are going to apply for a credit card or making an appointment with the loan officer at the bank.
Make it a point to pay the bills on time
It should be noted that the credit reports include only the money that you have borrowed and not those regarding the bills and the monthly payments.
Similarly, the bill payment histories are not used to calculate your FICO score. Having a good FICO score also helps you in qualifying for loans and mortgages. Hence, make it a point to pay all your bills in a timely fashion.
Try to get a Co-signer
One of the best advantages of building credit from scratch is that you don’t have to do it all alone. Most of the lenders allow someone with an established credit history. For instance, you can ask your parents, a family friend or an older sibling to co-sign the credit application. The best thing about a co-signer is that the lenders don’t have to depend solely upon your credit history.
Sam Payn is a popular blogger who has been associated with guest blog posting for the last 10 years. He has a flare for writing on topics related to finance, credits, law etc.