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Establishing Credit - What You Need To Know Part 1
Establishing credit is one of the most important things you
can do in order to add stability to your financial record and
dramatically increase your ability to borrow necessary funds in
order to purchase a new home, new car or even pay for college
expenses. Unfortunately credit has two sides to it that consumers
can exploit. The good side is very valuable and prevents
consumers from having to save for many years in order to afford
the finer things in life. The bad or dark side of credit can lead
to individuals amassing large amounts of debt they eventually
find themselves unable to repay. With this in mind one of the
best investments anyone can give himself or herself is the
financial knowledge necessary to handle and ultimately use credit
wisely.
Before you can begin to establish your credit record you will
need to find a lender that will loan you the necessary funds in
order to start your credit history. The rates that lenders charge
varies depending on the consumer they are loaning funds to but
they all look at various types of information in order to
initially determine the credit risk or liability an individual
may present when looking to obtain funds. This information will
include a consumer's ability to take on additional debt, which is
easily obtained based on current expenses (such as rent, food,
utilities?etc) subtracted from current income. The result is the
amount of additional expense that a consumer can comfortably
handle without problems of repayment. Lenders like consumers that
own assets such as stocks, bonds, insurance, bank accounts,
rental homes and cars. A lender may view these assets as
collateral against any amount borrowed.
Perhaps you already have a small amount of credit history
already on record, if so this can help in the loan approval
process. If a consumer has already borrowed money before and paid
that loan back in full without any types of problems or late
payments then a credit history has already been started.
Additionally if that same individual has or uses a credit card
wisely it can also help in projecting an image of being
creditworthy. A lender can use this information to determine the
amount of debt a consumer may already have, how many credit cards
they have, and whether they make payments on time, which helps
the lender make a determination if that consumer can be trusted
to handle the repayment responsibility of additional credit.
If a consumer already has some amount of credit history built
it then it becomes easier to qualify for additional credit in
order to increase and improve their current credit history.
Unfortunately for the individuals that have never used credit
before establishing a good credit history can be difficult. This
includes people who always pay in cash, work out of their home or
perhaps just started working. Part two of this article provides
information on what they need to do in order to establish
credit.
Timothy Gorman is a successful Webmaster and publisher of
Debt-Relief-Solutions.com He provides more debt relief,
consolidation and free
credit counseling information that you can research in your
pajamas on his website.
MORE RESOURCES:
Hanmi Financial appoints chief credit officerBizjournals.com, NC - 3 hours agoHanmi Financial Corp. has appointed John Park executive vice president and chief credit officer, the company said Wednesday. Park was most recently senior ... |
Credit - Google News
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