Tips To Maintain A Good Credit Record
By Alfred Anderson
A brand new snazzy car is often tempting enough to plan for a new car purchase, and there is no better way to finance it than opting for an automobile loan. However getting the right loan amount at the right time depends to a larger extent on the credit score of the borrowers. A good credit score facilitates a quicker loan allotment while a bad credit score, in most cases may pose a hindrance in getting a hassle free loan. Due to an increasing demand of auto loans, a number of automobile financing companies have come up with customized loan solutions to serve borrowers having a poor credit history, but the manifold benefits associated with a good credit record cannot be undermined. In the present days, due to our ever-increasing demands, it might seem a bit difficult to maintain a good credit history, but taking a systematic approach towards our financial needs with a pre-conceived strategy certainly helps to build up a good credit record over a period of time.
The primary step involved in the process of establishing a good credit history is to open a checking or savings account. These accounts will not only be considered as a valid credit account by the lenders but also as substantiation to your financial stability. The transactions done through these accounts over a period of time reflects the financial responsibility of an individual. An account without any check bounces is sure to serve as a valuable input towards a good credit score.
It is advisable to either apply for a credit card with the least possible interest rate or to go in for a secured credit card. Secured credit cards are issued against an amount deposited by the cardholder in the lender bank account, which usually becomes the credit limit. In case of any payment defaults, the money owed to the bank is deducted from the deposit made in the bank account. Customers should ideally go in for a secured credit card that has zero or a low application fee and offers conversion to an unsecured credit card after a year. It should be ensured that the card issuer reports to all three credit bureaus, failing which the card will serve no purpose in building the credit history of an individual.
Probably the simplest way to build a credit history is to get associated with someone with a good credit history. Being added as an authorized user/ joint user to an account with a good credit score would help in boosting your overall credit score. Apart from that, in case of a default, the risk is borne by both the holders thus minimizing your risk burden to an extent.
It is always good to get into the habit of paying all the bills related to the daily and monthly expenses in time. Any default related to these gets recorded in the credit report, which could be detrimental to the overall credit score.
Last of all it is important to know the method of credit score calculation A credit score/ FICO score is a combination of various factors such as the payment history, amount of money owed, length of credit history, and types of credit used. These parameters essentially demonstrate the financial stability of an individual and thus serve as valuable inputs in the credit score calculation. Most transactions that reflect your financial stability are likely to be considered in the credit report.
Complying with the above steps will surely help in building a good credit record. The lenders will determine the credit worthiness of an individual by combining the credit score with other factors such as the employment history, income, savings and the amount of loan applied for. However a poor credit score does not necessarily disqualify a borrower from seeking an automobile loan. Borrowers with a bad credit score can very well opt for financial companies offering bad credit car loans through their specialized network of lenders. Having stated that, loan seekers with a good credit history always have a comparative advantage over the individuals with a bad credit history.
About the Author
Alfred Anderson has rich experience in the field of online brand marketing. His interests includes Internet marketing and research on emerging online business trends. Car loans for people with bad credit
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