How It Works?
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WHY IS IT IMPORTANT TO HAVE A GOOD CREDIT SCORE?
Unless you come from a rich family chances are at some point in your life you would want to buy a house, a car or you might want to take a BIG LOAN and build your own house or start a business or pay lobola for your sweetheart. That is when you will want to apply for finance from banks/financial institutions. Now for a Financial Institution/ Bank to decide whether to give you their money or not. One of the first things they do is to pull your credit record (in the background) and assess how responsible are you with your existing or previous credit.Secondly the main reason why it is important for you to have a good credit score is so that you can get a competitive interest rate so that you do not end up paying more money to the banks simply because you have a bad credit score and as a result banks don’t trust you that much. So you want to be in a position to negotiate a better interest rate with your bank and that is where you actually win big time by just having a good credit score.
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Banking Institutions
FOCUS ON TAKING CARE OF THESE 7 THINGS YOU WILL BE CREDIT WORTHY FOR LIFE
First of all you need to understand that your credit profile is based on how you manage the accounts that you already have.
It is not just about how much you pay for your existing credit but you must pay your accounts on time. Paying your accounts after the due date will make your creditor to list you on the credit bureau as a slow payer and that decreases your score. So if you anticipate that you will not make a payment on time, the sensible thing to do is to call your creditor as early as possible and explain your situation and than make a payment plan. This might help you to avoid your creditor to send the information of your late payment to the bureau.
Make sure that you pay at least the minimum amount due every month because if you pay anything less than the agreed payments you will be listed as a slow payer. Please note that paying more than the minimum due is only good in decreasing your interest charged on the account and to pay it faster but it does not increase the credit scoring.
Pay your account every month, don’t skip months even if you know will pay 2/3 times the following months because skipping months will affect your credit score negatively.
Avoid doing hard enquiries. First an enquiry is where you check if the service provider will be keen to give you credit. There are 2 types of enquiries . (A) HARD ENQUIRY and SOFT ENQUIRY.
(B) Hard enquiry is when a company / service provider is checking your credit profile for
the purpose of granting you credit that is a hard enquiry. Soft enquiry is when a company is checking
your credit profile for the purpose of granting you credit that is a hard enquiry. Soft enquiry is when a
company is checking your credit profile for the purpose of giving you a job, or if you are pulling your own
credit profile to check it, that is a soft enquiry and does not affect your scoring badly. So avoid this thing
of applying for too many credit from different credit providers in a short space of time. Rather apply
from 1 service provider if they approve you great but if they decline you rather pull your credit profile
and check what is wrong so you can fix that first before you apply to another store or service provider.
Have a good mix of credit types. Mainly they are 2 types of credit.(A) Secured Credit (Long term) and
Un secured Credit (Short term) like credit for homes and loans.
Account Durability (How long you have had the account) So the longer you have kept the account the better for you because service provider is able to assess your application better and are able to trust that you will pay back their account well because there is evidence that you have a long credit history and you can be trusted. It is critical for you to have credit if you want to build credit profile because your credit record / profile is made of the information that your creditors have of you about how you manage your accounts. The service provider have a duty of submitting your payment behavior to the credit bureau, the credit bureau will than list that information on the credit record and their system will calculate your credit points based on that information. That is how they calculate your credit scoring. You must remember that fixing your credit profile and getting your scoring up to 700 and above is very possible but it is not a quick fix it will not take a few hours or a few days but it can take a few weeks or months depending on your skill and the extent of your issues that you want fixed.
How To Use Credit To Build Wealth
The key is you need to make sure that you take credit for only one purpose and that is to generate more money for you, not for consumption but for production. For example taking credit to buy/build a house is good even though you might not generate money instantly but a property is a good investment, like buying land or livestock. Buying a car for business is also good credit usage as well as any other item that is bought to generate income.
SOME OF THE LAWS WORKING IN YOUR FAVOUR
