Most people today live their lives in part on borrowed money. Many of us live in houses paid for with borrowed money, or we drive around in cars that we took out loans to buy. Some of us have student loans that we’ll be paying off for many years. One thing that can make it really easy to borrow money is having good credit.
For those of you with really good credit, you know how easy it is to borrow some cash. Lenders will literally fall over themselves to lend you money. However, if your credit isn’t so good, then you may have some troubles even getting approved for a low balance credit card.
One thing that can keep your credit rating sparkling clean is if you always pay your bills on time. Any late payment will stand out as an obvious blemish on your record, so always be careful not to be late. They keep records for a long time, so paying late can really haunt you for a long time.
Not having too much debt is another important factor. If you carry too much debt, it will make lenders very hesitant to lend you any more money, as they won’t think you’ll be able to pay it back. Try and keep your debt to income ratio as low as possible in order to be a low risk borrower in the eyes of the lenders.
Calculating your debt to income ratio is pretty simple. Just count up all the payments you make every month to loans or credit cards, and then divide that amount by your gross monthly salary, or your salary before taxes. If this number is below .35, then you are in good shape.
One more thing to keep in mind is your credit card balances. If the balance on your credit cards are over a certain percentage of your total available credit, this will send up red flags. Try and keep this below fifty percent, or even lower if possible. For example, if your limit is a thousand dollars, try and keep your balance below five hundred bucks.
Keeping a good credit score is easy when you follow these simple tips. You’ll have a much easier time borrowing money, and life will be much more enjoyable.
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Tags: business, credit, Credit Cards, credit score, Debt, finance, lending, loans, money, payments, personal finance