You had checked your credit score and you ended up totally disappointed? Yes, low credit score can damage your dreams of receiving a loan. Although restoring the score takes some time and effort – which concerns mainly changing some bad habits and too extravagant way of thinking- it is possible to become a more creditworthy client.
Surprisingly, being a credit-free man does not help, in fact, it damages your credit score. You have no credit history? There is no evidence of your creditworthiness and there is no possibility of giving any assessment of your financial personality. Age, race, salary, place of living, marriage or occupation (and other personal details) do not influence your credit score. If you do not provide any significant information about your experiences as a borrower, you cannot immediately become a good candidate for a credit. So what should you do? Have a good credit history!
It is also not easy to increase your bad credit score. You definitely need a new credit to raise the score, but no one wants to give you one. Borrower’s “dirty” past costs a lot. If you are already familiar with the topic, you probably know how much you can gain from having a high credit score so do not give up and prepare yourself for necessary changes.
Lenders check your credit score for one reason: to check how successfully you deal with money. Your score does not inform who you are, how much your earn and where you are from. Its main concern is what kind of borrower and payer you are. Reliable and punctual ones are the most precious. Your credit history shows whether you are creditworthy or not really.
So how about closing the old accounts and starting with a blank sheet?
The fact is that closing your old accounts damages your score. One of the deciding factors in calculating the scores is credit utilization. It includes a ratio between the amount of your debt and your credit limit. By closing accounts you lower the amount available to you, which automatically increases the utilization. In the eyes of lenders, having the old accounts is considered your advantage. Instead of closing them just change the course of history. Reduce the balances and prove that you cope with your credit well enough to receive more trust. Become strictly punctual with your payments and do not burden yourself with more credit than you can carry. Inability to pay off your credit every month is always a warning sign for lenders. You are not seen as a safe and promising payer and your credit score cannot go higher until you show better financial management skills.
Taking care of your accounts pays off. Especially, a long term care is valuable, yet you always have a chance to fix the faults. If you are working on your high credit score, remember that your accounts can help if they become a place to show that you are a responsible borrower with a long credit history and personal finance management experience.