Dealing With Credit, Score And Report

Written by: Samuel Gregoth
09/26/2019

credit-cards-process

Just as a bad foundation is disastrous for a building, so is a bad credit score for the financial health. Credit cards, credit scores and everything else that revolve around these terminologies are like the base for financial freedom. A credit score is a number that your lender will use to determine your ability to pay back the loan they will let your borrow. Similarly, the plastic card that you use for your daily purchases and household expenses comes with incredible benefits if used correctly. 

Starting With Basics

In order to understand what credit score is, you need to take a glance at your credit report. A few companies called credit bureaus or agencies, such as TransUnion and Experian, maintain these reports by gathering various information about consumers and merchants whom they have done business with. So, this report is the ultimate guide to your lenders, even insurers, landlords and employers. The information collected is plugged into a complex algorithm to create a score known as credit score. 

Improving Your Credit Score

There are many ways that are both easier and arduous to improve your credit score. A better score will lead to a loan or credit card with a low interest rate and therefore more money is saved. To increase your score, you need to pay your bills on time; the best way to do is to automate payments. Similarly, borrow the amount that you can easily afford. Lenders like to see that you are using only a fraction of your credit limit. Say, you have a credit card that lets your borrow up to $5,000. If you owe only $1,000 by the end of the month, your utilization ratio is 20% which is a good number. Again, hold on to your credit card as long as possible. Unless you are paying a big annual fee, don’t close the account. 

Being a serial credit card applicant is as bad as not paying your monthly mortgage on your primary residence. It can have a big negative impact on your credit score. Additionally, applying for credit cards frequently will result in “hard” inquiry which tend to cause a dip of your score. That said, there may be times when you need to make multiple applications – like when shopping for mortgage. Fortunately, multiple inquiries like this are treated as single inquiry and it won’t affect your score. 

Correcting Mistakes

From time to time, it is important to keep an eye on your credit report. Unfortunately, credit agencies tend to make mistakes of various types – some are serious and others not so much. If you find an error on your report, contact the agency right away and file a dispute. Be specific in what you want to be changed, added or deleted. If you disagree with the outcome, you can write a statement and contact the agency again. Still not satisfied with the results? 

Finding The Right Credit Card

Because you are in the process of finding the best credit card for your needs, the focus here is on the value as well as cost to be paid. The credit card brochure that comes along with the card can help you find and figure out the opening expense you will incur. Presumably, you will not be using the card without the terms that are convenient to you, so the sooner you find, the better. There are many online tools that will help you shop around and zero in on the best card offer that you have been looking for. When using these comparison tools, ensure that you are unwittingly not comparing apples to oranges. Fortunately, you will also find the task of policy hunting easier than you thought due to the plethora of information present on the web.

Other credit card users and reviews online can be very useful in helping you find the best possible credit card for the purpose. No one can understand the need for a good card that carry value better than them, making your decision about the type of credit company you choose an informed one. If you are associated with a bank or financial institution, finding the credit card offers for your needs and budget should not be hard either. Moreover, in the event of identity theft or other issues, your credit card company will be in a better position to handle them.

Thinking For The Long Run

Establishing a long-term relationship with a reliable credit card company is vital to getting your needs met. There is absolutely no way to predict when you will be faced with a situation requiring additional financial assistance even if you have a substantial savings. Fortunately, most good credit card companies are easy to deal with or negotiate and are equipped to handle difficult situations with ease. Reliable means, their response to such situations will be immediate. Moreover, if you are changing from one financial company to another, this relationship will be essential. In most cases, your credit card company will act as a bridge between you and the potential lender. Once you have chosen the credit card issuer, you are required to sign documents. Most transactions such as balance payment, transfers and claims can be made online.

Loyalty Pays Off

Credit card companies have the tendency to concentrate or lean on loyal customers. They prefer to offer their clients the best possible discounts and deals only when they know that the clients are there to stay for long term. So, if you are a long-time customer of one such credit card company that also offers financing, check with it and ask for loyalty discounts. These reduced price offers can save you a lot of money and decrease your fees and interest rate significantly. When finding credit card companies like this, it is a good idea to consider some of the long term consequences. Getting credit cards for other members in the household from the same company will be much better for you financially.


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Dealing With Credit, Score And Report

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