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[H1242]How To Have Good Credit

by Jessica Deets, Jes

A person's credit history will always be an important factor when lenders consider granting a loan. It demonstrates the ability and desire to make credit payments according to agreements made in the past. Therefore, it's important to spend the time necessary to develop a positive credit status and to repair any poor credit history listed in a credit report.

Here's the factors to consider in maintaining good credit and for repairing any poor credit.

1. Time
Keep in mind that it will take some time for bad marks in your credit file to be removed. It also takes time and effort in the process of having derogatory credit removed. And, you'll need some time in making payments as agreed to show positive credit behavior, six months of on-time payments looks good to a lender.

2. Work
It will take some work to stay on top of your credit payments and always stay vigilant to avoid being late on a payment that could then be detrimental to your credit status. If you're going to be late on a payment, do everything possible to contact the lender and work out an agreement for a partial payment or some other means to stay current on your loan or credit card. Many people have been surprised to find that with just one phone call, they can make arrangements to re-arrange their payments, make a partial payment, change the payment date, or make other accommodations to fit their situation (but that phone call has to be made first).

3. Patience
This goes right along with time. Repairing credit and maintaining good credit is a process that just doesn't happen overnight. If you don't agree with something on your credit report, you have a right to dispute that item. If you dispute an item on your credit report, it will take time to be resolved (around 30 days and it may not be resolved to your satisfaction). Every time you apply for a loan, the application process will require patience (if you try to rush this process, you may get a quick "no", rather than a thought-out "yes").

4. Wisdom
Use credit wisely. Don't overextend yourself. Don't say yes to every loan offer you get. Watch out for high interest credit cards (or agreements where the rate raises substantially over time). You can find lower interest credit in the form of vehicle loans, mortgages, or home improvement loans. Think about each purchase you make in light of it's impact on your credit. Ask yourself, "do I really need this?" Most importantly, keep in mind that less debt is just as important as having extra spendable cash on hand.

In summary, use your credit wisely and make your payments on time. If there's bad marks on your credit report, make a resolve that from now on everything will be paid on time. If you have a financial emergency, call each lender and work out an arrangement to get through until you get "back on your feet." If you disagree with any bad credit on your report, dispute it. In the end, you'll want to make this a long-term commitment concerning credit and you'll then find that whenever you need to borrow money, it will be there for you. It may not happen overnight, but if you work at it and pay attention to the details, it will happen.

Copyright (c) 2006.

The credit score shows someone how desirable they are to a lender. When a lender sizes you up to determine how much credit, if any to grant you, it usually looking at your credit report and measures your past credit history performance based on your credit score. Generally, a lender usually looks at these 3 keys areas: character, capacity and capital (sometime known as 3Cs) to project how responsibly you handle your credit obligations. Hence, to qualify for and establish good credit, you need to get good score in these 3 areas. Let discuss it one by one.

Character

When you promptly pay principal and interest on your mortgage, student loans, credit card and other loans, you established a good character. By demonstrating a strong sense of character, you persuade the lender to trust that you will make a good-faith effort to pay your bills even if you run into financial difficulties.

Capacity

Capacity measures your financial ability to assume a certain amount of debt. Whenever you apply for a loan, the lender will ask for your annual income statement and your investment portfolio and he/she also want to get to know your other income sources. Many banks set minimum income requirements that your must meet to qualify for certain dollars of credit. The higher your total earning, the larger your credit capacity will be. Besides considering your sources of income, lender also takes into consideration of your existing debts. They prefer it if no more than a maximum of 36 percent of your income pays your total fixed expenses, and if no more that 28 percent of your income pays for housing, either mortgage or rent. The more debt you incur, the less credit lenders extend.

Capital

Lenders consider stocks, bonds, mutual funds, real estate, collectibles, cars and other asset as your capital that they can disposal to retire your debts if your character and capacity do not prove sufficient. Sometimes, lender may need you to pledge your capital/asset for your loan if your character and capacity are not sufficient to persuade lender to approve your application.

The Benefit of Having Good Credit

Lenders love people with good credit record to borrow money from them. That's why people with good credit get a better offer in applying for credit. Among the benefits of being a good credit are: the lower interest rate, faster application approval, more attractive packages with more choices. It's mean "Save More Money If You Have Good Credit". If you have good credit, you even can negotiate with the lender to lower down the interest else you will turn your head to other lender.

In Summary

Having a good credit score means you have more options available to you. You can get loans with better terms and rates and you have more available to you when it comes to types of loans. Good credit record build over time, hence it's never too early to start to establish good credit record for yourself and qualify for better options at the time your need it

Article Source : Consolidate Private Student Loans

About Author

Both Jessica Deets & Cornie Herring are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Jessica Deets has sinced written about articles on various topics from Interest, Acid Reflux and Heart Conditions. Expert author Jessica Deets researches helpful information and has a passion about credit. The website at has more informatio. Jessica Deets's top article generates over 60500 views. to your Favourites.

Cornie Herring has sinced written about articles on various topics from Credit Cards, Financial Planning and Free Credit Report Score. Cornie Herring is the Author from "StudyKiosk-Credit Basics" is an informational website on credit basics,. Cornie Herring's top article generates over 49500 views. to your Favourites.