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How To Fix A Bad Credit Rating
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How to Fix A Bad Credit Rating

Why credit is so important?

I'll tell you why. Whether you want to buy your first house or whether you want to buy the house of your dreams you will need to be financially sound as you go through your life. In order to create a structure a strong financial foundation, it will require that you learn about 5 C's of credit.

If you're looking for a job, especially in today's job market you will want to put you best foot forward where your credit is concerned. Employers have gotten to be very picky about who they hire. One of the thing they will look at is your credit score.

I'm sure you seen it on most job application where they ask permission to do either a credit check or a background check. Don't be misled by this request, just know today when companies ask your permission to do a background check it will entail a credit check, too!

When they view your credit, what the report will reveal to your potential employer is what kind of person you really are. Keep in mind they really don't know you and in order to make the best decision possible using your credit report will help them make a better decision.

You may have an outstanding interview, but really what it comes down to is what you look like on paper or what does your credit report reveal about your character? I need to be blunt here if you have a bad credit rating you are in big trouble!

I'm sorry to say, but it doesn't matter whether you've lost your job, or whether you have medical bills up the butt! All that really matters is your character. Your credit is a way that anyone can make an assessment about who you are as a person.

I use to hear the term 'dead beat' and attributed that term to people who didn't pay their child support payment. What I have learned in my research about credit and how to improve it. Creditors make a judgment about you based on your credit score.

With this information they will determine whether you can get insurance. If so, whether it will be from a reputable company or will it be from a substandard insurance company. It will also determine what interest rates you will be charged. There are a lot of bad drivers in the world who have good credit.

What You need to know about the 5 C's of Credit

When you learn the 5 C's of credit and what it can mean to you, you will arm yourself will tools that will benefit you throughout the rest of your life.

(1.) Cash - Which can sometimes be called capital is the total value of everything that you own. Can all be called your net worth. Net worth is arrived by subtracting total assess minus liabilities.

(2.) Cash Flow – Is determined by how much money is coming in on a consist basis. It can be determined daily, weekly, monthly, and yearly. Do you have more month at the end of your money?

Then you are experiencing what is called a negative cash flow situation. When you make more than you are spending, then pat yourself on the back, because you are enjoying the fruits of your labor and you are having a positive cash flow or what creditors love which is called Capacity.

(3.) Collateral – When you pledge a specific property such as a (mortgage, car, etc) as security for a loan. Bottom-line, if your fail to make the payments the creditor can force a sale of the item that was use as collateral.

Another form of collateral is your reputation. Your brand if you will just like Pepsi is a brand. Your reputation can be used as a form of collateral in the financial community. Another reason why your credit is so important.

(4.) Character References – You have complete control over your character. Creditors will look at your character that you developed or your reputation. A great what you can build your reputation is by asking for references from anyone you know.

Whether it be for trade or character references it is all tied to your character. You can develop your reputation when it comes to your finances. I would suggest you begin with the people that you normally do business with.

It could be your doctor, dentist, chiropractor, people who can attest to your character and how you pay your bill for their services. This is a great way to develop your own creditability. These things that I'm suggesting to you will not show on your credit report.

But, if you will put these character references in a binder, it will come in handy when you are attempting to persuade a banker in your favor when seeking out a loan. Another benefit you will gain from having a binder like this is, it is an ego booster.

Periodically leaf through the pages of your character references and you will feel really good, because you took the time to build your reputation, and you have good will with a lot of different people.

If a banker had to make a decision between two candidates with the same credit scores, how will he make the best choice for his bank? If you've given him your reference binder who do you think will get that loan?

(5.) Conditions – Whether it's the local economy, global economy, or national economy just be observant of what's going on around you. When you approach a banker for a loan, if will weigh heavily in your favor if you can talk about his concerns.

Are there foreclosures that the bank owns in the area? Speak to him about it. Tell him that you can imagine how hard things must be for the banks right now. Contrary to what people think, banks do Not want foreclosures on the books. When banks have to take back a property it is considered a dead asset.

Banks are penalized for having dead assets on the books. It means they can't loan out any money. If you can address your bankers concerns and make him feel that loaning you the funds necessary would be a win-win for him, then you just may tilt things in your favor.

Having that character reference binder can help cement the deal for you. Just knowing the 5 C's of Credit you are now armed with a tool that is very valuable. Can you see why it is so important to fix a bad credit rating?

Can you see why it is really a necessity to improve your credit rating? Don't put it off any longer! It is not impossible to fix a bad credit rating. But, it will require some effort on your part. Are you up to the challenge?

Street Talk

Are you a co-signor on car loan, mortgage loan? Has it brought your credit rating down a bit? Here is an excellent tip, how you can enhance your credit score.

  about 1 decade ago
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