Credit history
How to build your credit history properly?
In order for your credit rating to grow, you need to have multiple credit cards, which is considered a positive factor. However, each application for a new card or loan can negatively affect your rating. What to do.
Your goal is to gradually open new cards and take out loans, minimizing the number of rejections. Naturally, it is ideal if every application you make is approved.
It is important to realize that it is impossible to always keep your credit rating growing, and this is perfectly normal. Sometimes, in order to achieve a high score and a good credit history, it is necessary to lower your score periodically.
However, having only a high credit score is not enough to get your application for a new credit card, bank loan or car loan approved.
Therefore, it is important to choose credit cards with a high probability of approval. For example, it is difficult to get a Coscto credit card from Citi bank if you have less than a year of credit history. It's also hard to get an Apple credit card if you've never bought Apple products and you have a low income. You can find out the approximate likelihood of approval on the Credit Karma app.
Tip: Apply for a new card no sooner than six months after you opened your previous card.
Also, if your score is already high and you have a credit history of more than a year, you can try to apply for 2 or 3 cards at once.
Although every time you apply for a loan or open a line of credit, your score will drop, it will benefit you in the long run.
Also, if you plan to take out a car loan or mortgage, you need to have a successful history of repaying loans. Your first car loan will probably be at a very high interest rate (10%-20%) and not all banks will agree to approve it. With the exception of buying a new car without a bank, a first time buyer - a person taking out an auto loan for the first time - is a high risk customer. However, most people agree to these terms and then refinance the loan at 3%-5% at the first opportunity.
What factors affect loan approval:
If you move and change jobs frequently, all of this has a negative impact on your ability to pay.
How else can you increase your ability to pay?
Tips:
In order for your credit rating to grow, you need to have multiple credit cards, which is considered a positive factor. However, each application for a new card or loan can negatively affect your rating. What to do.
Your goal is to gradually open new cards and take out loans, minimizing the number of rejections. Naturally, it is ideal if every application you make is approved.
It is important to realize that it is impossible to always keep your credit rating growing, and this is perfectly normal. Sometimes, in order to achieve a high score and a good credit history, it is necessary to lower your score periodically.
However, having only a high credit score is not enough to get your application for a new credit card, bank loan or car loan approved.
Therefore, it is important to choose credit cards with a high probability of approval. For example, it is difficult to get a Coscto credit card from Citi bank if you have less than a year of credit history. It's also hard to get an Apple credit card if you've never bought Apple products and you have a low income. You can find out the approximate likelihood of approval on the Credit Karma app.
Tip: Apply for a new card no sooner than six months after you opened your previous card.
Also, if your score is already high and you have a credit history of more than a year, you can try to apply for 2 or 3 cards at once.
Although every time you apply for a loan or open a line of credit, your score will drop, it will benefit you in the long run.
Also, if you plan to take out a car loan or mortgage, you need to have a successful history of repaying loans. Your first car loan will probably be at a very high interest rate (10%-20%) and not all banks will agree to approve it. With the exception of buying a new car without a bank, a first time buyer - a person taking out an auto loan for the first time - is a high risk customer. However, most people agree to these terms and then refinance the loan at 3%-5% at the first opportunity.
What factors affect loan approval:
- Your ability to pay (the total amount of credit cards you have is taken into account)
- Your income
- Your monthly housing expenses (they should not exceed 30-50% of your income)
- The length of time you have lived in your last place of residence
- The length of time you worked at your last place of employment
If you move and change jobs frequently, all of this has a negative impact on your ability to pay.
How else can you increase your ability to pay?
Tips:
- Every six months to a year, submit a request to your bank to increase your credit limit. If you get a favorable decision, it will not affect your score, but it will increase your ability to pay.
- Choose credit cards with no service fee. Pay attention to the fact that free service is provided not only in the first year, but also in subsequent years.
- When opening your first credit card, try to use it at the beginning to fulfill the conditions for the welcome bonus. Usually, to get the $200-$300 bonus, you need to spend about $1000 in 2-3 months from the time you open the card. So, when you open a new card, you're not only building your credit history, but you're also earning a few hundred dollars.
- Make all your purchases as much as possible with credit cards and then pay off the debt immediately instead of using a debit card. That way you can get a nice cashback every month of $30, $50 or even more.