To ensure that you always get access to loans whenever you need it, it is important that your credit history is positive, and looks good to any creditor. This will assist them in deciding to give credit to you. There are several ways to build a positive credit history, and they all depend on the way you manage your finances.
We have discussed that the most important way to have a good credit history is to pay back your loans on time, but in addition to that, here are other important factors in building a positive credit history:
- Have some credit but not too much. Having no credit history is almost as bad as having a negative credit history. If you have paid one or more loans as agreed, you have shown you can manage your finances responsibly. If there is no credit history to your name, a creditor may be unwilling to gamble on the chance that you may not pay back your debt.
- Apply only for the credit you need. Several recent inquiries may indicate you have opened new accounts that don’t yet appear on your credit report.
- Be aware of your debt-to-income ratio. Mortgage lenders consider your monthly payments compared with your monthly income.
- Demonstrate your stability. Some creditors consider your length of employment, length of residence, whether you own or rent, and if you have any savings.
- If you begin to fall behind on your payment, contact your lenders. Ignoring the situation will only add to your problems. Many lenders will work with you to set up a different payment schedule or interest rate. It never hurts to ask.