Articles on Mortgages All Articles

Borrowing Fundamentals 101 Part 2

ADVICE Author: Kam Brar

What can I do to build my credit so I can qualify for the lowest rates possible?

Start with baby steps; begin establishing your credit with small manageable loans and or credit card accounts. Be careful and don’t fall into the same trap that most good meaning consumers do that is the one of actually worsening their overall financial situation by taking on too much too fast. These folks figure if a few credit accounts are good for their rating, than a lot will do wonders for it. This is a recipe for disaster as having so much available credit so quickly can be quite a temptation to those who have yet to learn the mastering of it.

Keep in mind also that cell phone providers and common utility providers don’t generally report to the credit bureau that is up until you miss a payment, so even though you made 59 on time the 60th one you missed is the one that the lenders will see. So make certain that the lender you’re getting the starter loan or credit card from reports to the credit bureau each month. Now don’t forget to do what any wise consumer would do, keep in mind that terms and conditions can vary vastly from lender to lender. It’s up to you to review the interest rate, fees, and penalties that may apply from lender to lender and of course and do as much comparison shopping as possible, it’s your money!

In addition it’s a good idea not to acquire more than one credit card in any 6 month period, and once you have 3 or 4 cards within an 18 to 24 month, you need to stop acquiring cards. Most folks will not need anymore than 3-4 any more and you’re asking for trouble both in the way of temptation to yourself and a nightmare if you’re wallet or purse is stolen. Also when lenders see that you’re acquiring a litany of new cards, they look less favourably on your loan request as you now have the potential of accumulating a whole bunch of new debt very rapidly.

Another way of establishing credit is to have someone with an established credit rating and history co-sign for your initial loan or credit card. When a friend or family member does co-sign a debt for you, it now means the loan will report on their credit and they are dually responsible for the repayment. So whatever you do, don’t let them down as any screw ups on your part will also impact their credit rating.

So let’s recap, first, never, never, never miss a monthly payment. Second, always pay on or preferably before the due date. Some cards consider you to be in default if you are one day late- causing you to pay a higher interest rates, and fees. Also with many credit card companies there is a 30 day grace period on interest, so if you pay you’re balance in full month to month you will never incur any interest). Lastly, don’t charge or borrow more than you can payoff each month. If you take the steps we’ve discussed here, they will help begin and establish your credit rating. Always remember that credit is a privilege not a right, and if you neglect to take care of your finances, it’s a privilege you will both quickly lose and or wind up paying exorbitant amounts for.

What can I do to repair past credit problems?

Unfortunately most of us tend only to learn by making mistakes. For many consumers, this

holds especially true when it comes to credit. If you truly want to correct your

past or current credit problems, it’s really quite simple, you have to change your everyday spending and money management habits. First you need to ask yourself, how did I get into this mess? What habits or choices caused me to manage my money so poorly? If you need help determining these answers, talk to a friend or family member who is good at managing money, or get in touch with a credit counselling service there are many resources to help you get these answers. The key is to get pointed in the right direction. When starting down the road of credit repair, don’t make the same mistake so many make that’s making temporary fixes instead of addressing the root problem. Root problems such as poor spending habits, reckless and impulsive decisions, failure to make and or stick to a budget of any kind. Borrowing more money to help dig out of borrowing money in the first place which may solve things in the short run but only makes the situation worse in the long run.

In closing it’s critical that you recognize that the process of rebuilding your credit will take some time and a lot of sacrifice depending on the severity of your situation. Only when you get a complete understanding of your individual situation, will you be able to take the next step. That’s implementing a budget and finding ways to change your spending habits daily so that you’re able to live within your budget and means. This is the only road to financial freedom, and if you’re truly committed to changing there is no past financial obstacle you can’t truly overcome.

Contact Information | Auxilium Mortgage Corporation
Name:	Kam Brar
Company:	Auxilium Mortgage Corporation
City:	Victoria
Province:	British Columbia
Country:	Canada
Phone:	250-590-6520
Email:	Email
Website:	http://www.kamthemortgageman.com