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Polishing Your Financial Rating

Financial/Credit Rating

From a lender’s perspective, the decision to advance a loan is largely influenced by a borrower’s credit score or rating.

Borrowers with a bad credit history will always remain in the bad books. Even those with good credit rating can easily become victims of erroneous information that may get in the hands of lenders without their knowledge.

If you want to keep a good credit rating you should:

Get an Annual Credit Review for Your Financial Rating

Hire an expert to do your credit rating, which you should examine thoroughly or your credit history may be distorted. Areas that you should look at carefully are late payments, tax arrears, and loan or credit card defaults. You should check if you have stretched your borrowing capacity – which should not be two thirds of your monthly net income.

Present the report(s) to your bank when you need credit as it might reduce the loan approval time.
It is important to note that some employers may also use your credit report to verify employment history or trustworthiness.

Close Up Loose Ends in Your Financial Rating

Pay any overdue debts that may be on your credit report. If you have problems paying, you may seek debt counselling services or a financial advisor who can help negotiate a reasonable repayment strategy. The settlement method should be included in your budget.

If you already have five or six major credit cards (even if they have zero balances), you will have a tough time getting additional credit. Why? Because the lenders think that you already have more than enough.

The secret to this hurdle is to cancel any credit cards that you don’t use.

Lenders will compare your credit card balances to the amount of credit you have available. The more cards you have close to the limits, the more of a risk you are to them.

Establish a Budget

It is a good policy to setup a family budget so that you know how much to allocate each month for housing, utilities, food and other expenses and also monthly repayments of your debt.

Seek Help If Needed to Polish Your Financial Rating

You may want to contact a credit counselling service if you can’t resolve your credit problems on your own or if you need help. These professionals can negotiate on your behalf for repayment plans that are acceptable to your creditors.

Use Debit or Pre-paid Cards

Debit and pre-paid cards work like credit cards but the use of the card is limited to the amount of cash you load to the card or money in your account.

Open Deposit and Savings Account to Improve Your Financial Rating

These accounts show your financial stability. You should open one or two accounts and maintain a significant balance.

Avoid bankruptcy

Bankruptcy will remain on your credit report for years from the date that it is filed. You should first seek credit counselling services before discussing any bankruptcy filings to restructure payments.

Those who have been declared bankrupt can work with advisors to revise the situation and qualify for some form of credit.
Published: 2009-05-05
Author: Leah Karimi

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