Credit River, MN (WiredPRNews.com) — Think like a lender. ” Turn the light bulb on.”
If you think like a lender, you can see which habits and traits you need to develop in order to be considered a good credit risk. Looking at your finances from this perspective will help you understand how you must manage your money to be appealing to lenders. There are few tips that can put you into the right mind set.
Know how money works.
Reading books about money and understanding how your accounts and loans work can go a long way towards helping you keep your credit in order. For example, if you know that some loans will charge you penalties for paying them off faster while others will not, you will be in a better position to make financial decisions. Plus, the more you know about money in general, the better decisions you will be able to make, which will help improve your overall financial state and will help you keep your credit in good shape.
You don’t need to do heavy duty research to appreciate how money works and how it can work for you. One easy way to think about money is to think of it the way you view your “time.” You probably don’t like to waste time and you want to make the best use of it possible. Apply the same attitudes to your financial picture and watch your finances soar! If overspending has caused you to have a bad credit score, consider the following sneaky mind set trick: equate your money with your time. For example, if you make twenty dollars an hour, then a magazine subscription of $20 will represent one hour of your work. Consider an hour of your work and ask yourself whether the subscription is worth the time you put into the twenty dollars. Once you start seeing money as something that comes from your hard work rather than simply a general “thing”, impulse spending will seem much less attractive, and it will be easier to keep your credit card limits low and you bank account stocked with cash!
“When thinking like a lender, ask yourself this very important question: based on what you know about yourself, would you approve an application for a loan submitted by you? Next, make a list of personal financial items that need to be addressed and prepare yourself for the lending office. Get your credit cleaned up and looking its best by talking with an expert such as The Credit Physician about what your goals are. Whether it is to buy a home, car, or obtain a loan for a small business – the quicker you take action and make proactive moves to fix your credit, the better your chances are of you being approved.”
Take care of things that affect how lenders view you.
Lenders will often look at not only your credit score but at other financial indicators, such as your income, employment record, and savings. Keeping these things in order can complement your credit score and make you look better to creditors. Some lenders have their own ways of calculating credit scores, so keeping your overall financial status in good shape is one way to ensure that you look good in all lenders’ eyes. Be aware that when lenders ask to see your credit score, the credit bureaus send not only your credit score, but also the top four reasons why your credit score is lowered. The most common reasons for lowered credit scores are:
1. Serious delinquency in repaying accounts or bills
2. Public record of bankruptcy, civil judgment, or report to a collection agency
3. Recent unpaid or late paid debts or accounts
4. Flaws in short-term credit record
5. Presence of a high number of new accounts
6. Late payments, defaults, or non-payments on one account or more
7. Large debts or amounts owed
Knowing that your lender sees these possible problems can help you understand the need to develop the best possible image of your credit. Lenders who look at your entire credit report may get a more positive picture of you than lenders who see only a number and four reasons for a lowered score.
Follow up on closed accounts.
You closed a store card years ago – but is it still listed as an open account? Bureaucratic mix-ups happen quite frequently at companies that may report your credit history with them. Therefore, if you want to maintain a good credit score, you need to follow up on financial details. Whenever you close an account – whether it’s a credit account, bank account, or utility company account, make sure that you get written confirmation that the account is closed and paid in full. Then follow up a few months later with the company to confirm the closed account. This simple precaution can save you hours of frustration – not to mention a lowered credit score.
Don’t move around a lot.
Lenders like to see stability – it suggests that you are stable in financial matters as well as in your life, and this makes you a better credit risk. Plus, each time you move you may have to change your credit information, and this can include switching banks. Switching accounts among financial institutions actually affects your credit score negatively by not allowing you to develop long term relationships with lenders. Remember that your current and past addresses are listed on your credit report even if they do not directly affect your credit score. Any lender looking at your full credit report will be pleased to see consistency in your residency and financial history. Not moving too frequently can also save you money on moving costs, which can add up quite quickly and affect your finances.
Written by: Michael Malloy ( The Credit Physician ) This author has been researching the anatomy of the credit report for years,giveing readers the information to empower them to take control of there credit reports.