Your credit score shall influence the approval for mortgage, car loan, business loan, personal loan and other financial products or services you are deemed to be eligible for. The kind of credit card you get also depends on this score. There are specific laws pertaining to credit history that you should be familiar with. At the very least, you must be aware of the implications of credit score and how everything works. This brief guide shall help you to maintain a good credit score.
- First of all, you should know that all entries or records in your credit history naturally fall off the report in six years. A financial transaction done ten years back does not have any bearing today. Whether it is a positive or a negative record, it will fall off the credit report and will not work to your advantage or disadvantage. Hence, if you have had a great record eight to ten years back, that is not going to help you. If the record was negative, then too there is no adverse effect on your creditworthiness right now. However, your present credit score may or may not be what you want and thus you must manage it.
- You must be a responsible borrower and repay all loans at the right times to maintain a good score. You should also keep paying all bills on time. If you have a mobile contract, do not default on payment and try to avoid settling other financial issues. Whenever you settle a loan or pending debt, your credit score takes a hit. Settling a loan implies that you do not have that debt any longer but the effect on the credit history is going to be against you and that shall stay for the next six years.
- You should not avoid taking loans as credit gets a boost when you repay them in time. However, applying for too many loans or having multiple debts at the same time will bring your credit score down. Do not initiate too many enquiries. A hard query to check your credit score has a transient negative effect. If plenty of hard queries are carried out and then a lender that may actually approve your loan does the same, the credit score may be somewhat reduced than what it was at the time you started to shop. But if there are unauthorised hard queries reported, you must contest them and get them removed.