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Credit tips for beginners:
You are graded on many things such as how long you are on a
job, your income, how long you lived at your address, and your debt
to income ratio.
Your job history is not that important. If you changed jobs
but stay in the same field you should be safe. In fact you can
say in the same field or industry and it wont effect your score or
approval at all. It helps if you spend some time at a
work place but do not fret if you have to change companies.
Many credit companies look at your income first. This also
falls in line with debt to income ratio or your ability to pay debt.
Credit is great but if you have too much of it you will not be
approved. If your rent, car payment, utilities...ect. take
most of your paycheck you probably will be turned down.
Having one credit card is great thing. You should establish
a credit account right away. Pay it off at the end of the
month and pay no interest. This is the best way to establish long
term credit history. Keep in mind some cards have
penalties for being late, and an annual charge. You
should weigh the annual charge against the reward you are
wanting.
Be wary though, colleges will hit you with credit applications
for free gifts. You will also get credit card offers
in the mail. Steer clear of filling out multiple card
applications instead choose a card that benefits you. Having
too many cards will hurt your other approvals such as a house, car,
or even loan to borrow money.
When choosing a card pick the rewards that will benefit you the
most such as airline miles or cash back.
High balances can hurt you and often make you go over the limit.
But if you have a high balance and pay it off it looks great.
Say you get approved for $5,000 but you only keep a
balance of $200 on it. It does not look as good as if you
had a $4,500 balance and paid that off.
Having a car loan and paying it off looks good - even if you can
purchase the car outright - make payments until the loan is
finished. Sure you might have to pay interest. You can
put the money for the car in a separate account and use your banks
bill pay so you do not have to worry about the payment being late.
You can look up your credit report once a year from all three
credit bureaus for free. Be wary if you want to see your score
- they will charge for it. It is always good to check the
information that they report it could be out of date or wrong.
You might not be approved if it shows you living in Oregon when you
actually never stepped foot in Oregon in your life! https://www.annualcreditreport.com/cra/index.jsp
When calling around for auto insurance be careful to tell them up
front not to run your credit. Too many companies reviewing
your credit will lower your score!
Sometimes companies will check your credit to see what you
qualify for. Do not let them unless you are sure that
you are going to take out that loan, or select that credit card.
If you are not sure ask if they are going to do a credit check.
Need an excuse for them not to - tell them that you are in the
process of purchasing a home and you can not have your report
run.
If you know you have excellent credit go after a low rate.
Do not be afraid to haggle on rates.
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