Simple ways to avoid poor credit score

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Credit Card Applications » Research » Guides » Building Credit History » Simple ways to avoid poor credit score

Simple ways to avoid poor credit score


Updated: December 26, 2012

The content is accurate at the time of publication and is subject to change.
An individual's past ability to repay a borrowed amount is called as his/her credit history. In a number of countries, lenders and borrowers rate the company or individual on the basis of this credit record when considering lending and borrowing of money. Synonymous with having a credit reputation, generally an account holder must avoid having a bad credit history, especially in the event, they anticipate borrowing finances. This is mainly because a not so good credit history typically mars an individual's chances of being termed as credit worthy by lenders like credit card companies. A person who has paid off debts in the past on time to other lenders increases his chances of scoring with the present lender being looked forward to as a potential lender. Individuals with a poor credit history have inappropriate monthly payments towards their debt obligations. As pointed by past payments, lenders keep in mind both the individual's willingness to repay a debt and also his ability. Usually, having an adverse credit history isn't restricted to a person's income, though lenders do prefer loaning money to those having a much higher income. So the higher a person's income, the better are the chances of a loan being approved. However, a negative credit card rating despite having a high income often comes in the way of lenders giving their nod in loaning an amount. Consumers' credit histories in many countries include data about their past payments, which has generally been provided by creditors. It specifically comprises of detailed account information about the kind of relationship a borrower has with a lender. When a person has an impaired credit history, not only is his payment history verified but other factors like frequency of high and low balances, credit limits, actions if any taken to recover a certain debt are all monitored deeply. Depending on the scoring model that has been employed, a consumers' credit rating can differ. The main factors that determine a bad credit history are the payment history, debt, account diversity, new credit inquiries, etc. A negative payment history is typically considered to put an account holder in the impaired credit history category. Depending on the kind of debt the person has, the duration of a person holding a credit history is also an important loan determinant. The diversity of the credit held by an individual along with serious inquiries made by a creditor to check the consumers' credit history further have an impact on the borrowers' reputation. It is necessary for individuals that intend to gain a loan or an amount as a credit stay as far from having a non-status credit history as possible. Simple methods can be applied to the routine handling of finances to ensure there's no negative credit rating. One of the most important things is to maintain a good record with the bank or the lender in general. The lender or creditor needs to know that the risk involved in crediting a certain amount to an individual is minimal. Keeping the purpose and the amount of the loan transparent makes it easier for the creditor to consider the individual as a potential borrower.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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