If you have ever been in a situation where you’ve been denied credit, you know that it does not categorise as one of the better feelings in the world. The slight confusion mixed with embarrassment and a dash of anxiety for good measure, can bring down just about anyone’s spirit. As discouraging as it may be, hearing that “the computer said no” can be prevented even after your credit rating is not in the best position. With some understanding of why a bad credit rating is generated and some basic tips to keep in mind, you can start taking credits again in no time whatsoever.
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Understanding why you have a bad credit rating
Credit rating or credit score is calculated differently depending on what bank your account is on, therefore you will find it varying between banks. In order to get understand how a credit rating is generated, you will need to know the determining factors. The contents of your credit file, any previous credit history with the lender and what you disclose in your credit application are all calculated to then generate your credit score. A bad credit rating can turn out to be very detrimental when you want to take out loans as you can be flat-out denied. Another side effect is having a higher interest rate even if you manage to take out a loan due to companies not wanting to take risks with financially unstable people. You may run into several other issues, like difficulties getting approved for renting or buying an apartment. A similar issue happens with cell phone companies, they also check your credit rating, seeing that it is bad they might entirely refuse you, leaving you the option of prepaid phones or a month-to-month drop in drop out type of contract which tends to be slightly more expensive. Purchasing a car can also prove troublesome, banks can deny giving you a car loan or approve it with a much higher interest rate. Needless to say, a bad credit rating is rather detrimental to just about most things you might want to do.
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How to fix it
There are several ways of slowly working your credit rating back up and you can start doing some of them as soon as your next bills are due. What you are essentially trying to accomplish is to seem more trustworthy in your bank’s eyes. Paying your bills on time is a clear way of showing that you can manage your finances in a timely manner to potential lenders. In order to keep your credit rating at a respectable level you may have to look into payday loans, bad credit is much better prevented than fixed. Payday loans are an excellent band-aid solution in case you run out of money to pay bills on time but want to keep your credit rating from going down the drain. Ensure you can meet the repayments though, the loans should be seen as short-term, otherwise the interest is astronomical. the As the old saying goes “an ounce of prevention is worth a pound of cure”. If you move house a lot, it may raise some red flags for banks. Many assume that the reason for moving a lot due to having issues with paying rent. If they can see that you have been in the same place for several years, they are more likely to see you as a stable and reliable person.