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How To Get Better Credit Ratings

Aug 5, 2008
It seems like a crazy idea, but the key to getting a better credit line is going to be obtaining a loan- even if you don't need it. It seems like it might be counter-productive to one's debt, but obtaining another loan is the best way to increase one's credit- provided that they can indeed pay it back each month on time.

Even with a poor credit history, there are ways to get an improved score and better financing. Getting a personal loan for simple reasons, perhaps for buying that new plasma screen TV, will build credit while still being able to enjoy the process of building credit. Of course, one could actually never spend the money and keep it for repayment- this is completely up to the borrower.

The simple reason for all of this is simple: building one's credit history. A credit history can only be built with interaction with the financial industry. It is seen as a better option to pay high interest rates when the money isn't needed and can be easily repaid than to pay high interest rates when the money isn't available and the prices actually hurt the consumer.

A great example of where these tactics would come in handy is in the first-time buying experience of a home, duplex, or even an apartment. Lenders will charge as much as 25% or more simply for the lack of credit that a borrower may have. Obviously if the consumer had worked on building their credit up to that point, they could very likely get away with 10% or smaller interest rates.

Relief for the younger generations is going to be harder to obtain, but paying one's bills on time and acting responsibly with a debit or credit card are great ways to show lenders that those with no credit are at least somewhat trustworthy. Showing that one makes a good income each month and that they save most of what they make is another clear indication of responsibility.

If a first-time buyer of a home or automotive doesn't have the best credit built up just yet, they can still do without a new home or vehicle for a little while longer while they amass a higher down payment. Having a higher down payment will often lower interest rates, and also shorten the term of the loan to make the interest rates less appalling on one's bank account.

In Conclusion

Loans are a tough subject to go about interacting with, but with the right education, it isn't an entirely frustrating process. To find out more, learn more from the bank that one does business with, consult Internet resources, and overall do everything possible to get the best deal.
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Learn more on mortgages and secured loans.
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