Credit Scare: Why Your Credit Rating Might Not Be As Good As You’re Expecting
So, the exciting time has come; you’re about to apply for a loan, perhaps to buy that dream car, or get a mortgage. Either way, you’re buzzing when you walk into your application meeting. Then, the credit check happens.
This is where many applications fall down and, sometimes, refusal here can come as a shock. This is especially true for those who haven’t needed to check their credit reports before.
Perhaps this is a mortgage for your first home, or an attempt to get your first credit card. It could even be that you’ve been accepted for credit in the past, but something unexpected has changed since then.
If you’ve had a financial setback, this article can help.
No matter the reason, refusal can leave you at a loss as to what could have caused the decline. In reality, there are a few reasons why your credit rating could fail to win approval without your realizing the problem. And, getting to the bottom of those is the best way to get accepted next time around.
No credit
If this is your first time applying, you might assume your score is perfect.
You’d be wrong.
For large loans, in particular, no credit rating is as much a red flag as a bad one. That’s because lenders want to know they can trust you. A lack of credit score doesn’t provide that guarantee.
The good news is that overcoming this is as simple as taking out options like credit cards and meeting all payments in full. Eventually, this will build your credit score up to make you a more appealing prospect in future.
Mistakes were made
There are also cases where credit refusal can be due to mistakes.
These could be human errors in your application. More often, though, they come down to mistakes on your report. If you think this is the case, it’s vital to seek a credit check yourself. That way, you can identify mistakes yourself.
It may be, for instance, that a payment you met on time was logged as missed. Or, it may be that inaccurate information about missed payments are posted to your credit history.
In that instance, you should challenge unjust bills with the company and credit bureau. If this issue is something like an undeserved parking fine, companies like GetDismissed could clear it for you. While it isn’t ideal, acting fast could still see you getting the loan you need.
Credit crunch
Even if you’ve been approved for credit before you may find that your credit rating isn’t so good this time.
Often, this can come down to your first source of credit. Even those who pay off their credit card every month can still damage their rating if they are flagged for a high utilization rate.
This effectively means the percentage of credit payments to your limit. In this instance, you should seek to reduce the amount you spend on your credit card. Over time, that will get you back in the green and accepted for the credit of your choice.
Use these tips to improve your credit score, get access to credit, and to lower your interest rate on debt.
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/