Having a bad credit history can affect your future loan applications. If you have any intentions or plans to get a loan in the future, you might have a hard time convincing banks or any other private lenders to approve your loan. Individuals with bad credit history are considered as high risk borrowers and for that reason, lenders are extra careful whenever they review a loan application. It is their duty to find out if the borrower has the capacity to pay. Even if you have the power to convince them, they may still be able to find a way to track your credit behaviour when it comes to borrowing money by checking your credit history reports.
So how do you become a responsible borrower? Here are effective ways on how to avoid bad credit history:
Avoiding Bad Credit History
- Pay on time – It is basically the most simple thing to do in order to prevent bad credit history. Make a schedule of them so you don’t miss any payment. Why wait for the deadline, pay ahead of time if you can.
- Know your limit – Let’s say you have a credit limit of $8,000.00, don’t get up to $7,999.00. Even if you are able to pay your bills on time, it can have a drastic effect on your credit score. Increase your score by using at least 30% of your credit limit. Avoid using the entire available credit limit.
- Avoid too many credit applications – As much as possible, avoid applying several credit cards just to obtain another credit limit. Don’t get too excited by applying more than one loan like cars, home and personal loans. Give it some space of preferably six months before you apply for another loan.
- Make full payments – Instead of minimum payments, why not pay bills in full? Before you make any purchase, make sure you can pay it at the end of the month. It is nice to shop for nice things but you always have to bear in mind that sooner or later you still have to pay for it.
Having a pristine and flawless credit history report is attainable. It is not so difficult to manage your debt if you have discipline and you know your priorities. Lenders will be more than happy to attend to borrowers who are responsible and have the intention to pay their obligations on time. Keep your credit history report clean because at the end of the day it is you who will benefit from it.