The Secrets Of Keeping Your Credit Rating In Top Shape

Our credit score. We hear a lot about it. People wanting to check it. How we might be able to improve it. What can sink it. But do enough of us have an understanding of what it means for us in real terms? Do you know what your credit score might allow, or might bar you from getting?

Understanding your finances is one thing. However, too many people get nasty surprises waiting for them due to actions that influenced their credit rating years ago. Below, we’re going to take a look at what really affects your credit rating and what it does for you.

keeping credit rating

Credit card use

Credit ratings essentially tell people how good you are for any of the loans or debts you’re given. Credit cards are one of the most common forms of small debt we all take on. So it only makes sense that a lot of credit ratings are affected by them. This doesn’t mean credit cards should be avoided. Simply that overspending on credit cards and having trouble paying them back will negatively affect that rating.

Your loans

Similar to credit cards are the loans you take out for other places. Being late or behind on loans or debts will reflect your poor ability to handle any more credit. Whereas getting paid off on time and catching up to late loans have great benefits. Even student loans affect your credit score.

Keeping up with student loan payments will have a good effect on your score. However, contrary to what some people think, paying them off in advance will not boost your score. In fact, it might even detract from it. This is because student loans are considered install payments. Paying them off timely in installments is part of the agreement. It shows you’re more responsible for long term credit than using lump sums to pay early.

Old debt

A lot of people worry about getting credit cards or loans of any kind. They believe they will negatively impact their credit rating. However, that’s not necessarily true. Mismanagement of these loans is what will have a negative effect. If you have old credit cards or loans, you can get them struck off you rating. But why would you want to? Paying debts off shows that you are able to. This is exactly the kind of thing that will have your credit rising, not dropping.

Why care?

It’s the big question for a lot of people. Why does it matter how good your credit is? We imagine that people asking these questions haven’t had any experiences of being declined because of bad credit. You can be denied the loans most people need to get important assets like houses, cars or a business loan.

A better credit rating also means that interest rates on repayments may be reduced. Even employers have a right to do a credit check on you. It’s entirely within an employer’s rights to deduce how reliable you are based on your credit score. So take care of it.