If you’re dating a girl and you find out she’s cheated on every boyfriend she’s ever had, you automatically become convinced that she’s cheating on you, right?
Or let’s say you just found out that the guy you went on a date with last night is also currently dating seven other girls. If that’s not a turn off, I’m not sure what is.
Guess what? Your financial institution feels the same way. Not about your dating history, but about your credit history. A bad dating history can make someone hesitant to be with you; likewise a bad credit history makes lenders cautious about approving you for a loan. If you’ve mistreated other lenders in the past, what proof do they have that you’ll treat them differently? It turns out the world of finance isn’t just about numbers, it’s often more about the relationship between the lender and the customer.
Here are two money habits that are a major red light to potential lenders looking to approve you for a new loan:
- You’ve made late payments in the past. This is where the “once a cheater, always a cheater” philosophy comes into play for lenders. One late payment might not seem like a big deal, but it is to your financial institution. Just like cheating on an ex shows your new love interest that you might cheat on them, making late payments proves to new lenders that you are more likely to get behind on your payments to them. Plus once a payment is past 30 days due, it gets reported to your credit history and it stays there for two years. That would be like cheating, and then not only do you have to feel guilty about it and apologize to the person you cheated on, but every love interest you have for two years after that has written confirm that you’re a cheater. This will result in a lower credit score, higher interest rates, and in come cases denial for loan or credit application. So avoid the trouble. You committed to making a payment. You committed to a relationship with your credit union or bank. Now you have to follow through. Make your payments on time.
- Your credit card balance is close to your limit. Capacity, or how much of your available revolving credit you are using, makes up 30% of your credit score. Simply put, how much of the credit available to you are you actually using? If the limit on your credit card is $10,000 is your current balance $100 or $9,999? You want your dream guy to be desirable to others, but you don’t actually want him to date others. Similarly, you want to have credit (in the form of credit cards, Home Equity Lines of Credit, or Unsecured Lines of Credit) available to you, but you don’t want to use the maximum amount. So be selective. Don’t put unnecessary things on your credit card. Pay off your balance in full each month. Use no more than 40% of your available revolving credit at a time.
In conclusion, you gotta treat your financial institution right. Otherwise it will tell all of its friends and no bank or credit union will want to date you . . . I mean finance a loan for you.
Need more help understanding your credit history and/or credit score? Check out: https://www.creditkarma.com/ or https://www.annualcreditreport.com/index.action.