If you do not manage your credit responsibly, your credit score will be affected and it will become difficult to raise a mortgage or a loan for anything else. However, no credit history can also have an adverse effect and the secret is to build a credit record that shows you have always paid everything as and when it became due, or cleared any debts early.
Handle Your Credit Cards
Credit cards are not all bad. If you can pay the balance in full each month they can be very useful. They will give you extra protection on some purchases, which has to be a bonus. However, if you run up a large balance and only pay the minimum amount each month, they will cost you a fortune in interest. As long as that monthly payment is made your credit score will stay good, but you would be better off having a bank loan to clear what you owe.
When you get the adverts for cards in the post or by email, don’t apply for everyone. Multiple applications do not look good to anyone considering lending you money.
Pay Bills When They Are Due
If you always pay your bills when they are due, your credit record will stay in good order. Some people ask the question ’Do medical bills affect your credit score?’ The same applies to these as all other bills, if you pay them late or do not pay them at all, yes they will affect the rating for credit against your name.
It is a good idea to set regular payments up for bills that go out every month. If these are automated you will not be able to forget that the payment is due.
Build A Credit History
You may wonder why any financial institutions bother to check you out before loaning you money or giving you a credit card. Let’s liken it to a stranger in the street approaching you and asking that you lend them $100. You may well have that in your purse or wallet, but before you loaned the money you would want to know what your chances were of ever getting it back.
That is why people check you out and if you have no credit history it is difficult for them to know if you honor your agreements or not. Possibly the best place to start is with a credit card from your bank, who will already know you. Don’t get carried away with the extra money you have to spend. Use the card sensibly and your record will soon start to build.
The interest rates on credit cards for outstanding balances are very high, but there are deals where you can have a card for 6 months free of any interest. Utilize offers like these to reduce the amount you owe, so you can pay debts off quicker and build up your savings, and because another thing that will affect your credit rating is if your cards are always at their limit.
Managing your credit is not as daunting a prospect as you may think. You can do without credit cards if you have to. Anything bad on your record stays there for 7 years, so use that time to repair your credit history, and then you will have no trouble getting the mortgage or loan you require.