Building a better credit history
When smothered by debt, consumers may not consider improving their credit history, due to other immediate concerns. However, for clients with money troubles, rebuilding a credit history is essential to getting new credit with attractive terms.
The credit rebuilding process is quite simple:
- Get small amounts of new credit and repay the debt on time. For example, get a credit card, use it to purchase some goods or services needed to pay off the card balance as according to your agreement with the card issuer
- Borrow a small amount of money from a bank and pay off the loan according to the terms of the agreement with the lender
- Add new positive information to your credit history
Negative information in a credit history gradually begins to disappear, as most damaging credit record information can be reported for only seven years and six months. As time passes, your credit history will gradually contain more positive than negative information, assuming that you manage your finances responsibly.
Potential consequences of a negative credit history:
- Won’t qualify for a credit card with a low interest rate
- Trouble borrowing a significant amount of money from the bank
- Credit record reviewing, a part of the job application process, may impact the employers hiring decision
- Denied a promotion with current employer
- Life insurance companies may enforce penalties by charging a higher premium or refusing to sell more insurance
- Landlords may refuse rental
Security clearances or certain types of professional licenses may be omitted.