Having a good reputation is important in life; you want other people to think you’re friendly, thoughtful, and dependable. If you ask someone to borrow twenty dollars for a couple of days, you want them to instantly say yes and not hesitate with an answer.
Once you ask them, they’ll base their answer on how you’ve repaid them or others in the past. Your reputation is like your credit report, for it is a reflection of your ability to repay a loan. The trust you’ve built up is similar to your consumer credit, and the better your consumer credit the more money and better interest rates you’ll receive. Both go side by side, for your credit report is based off of the status of your consumer credit and each one weighs heavily on your ability to get a loan.
Your credit report is the history of every single payment you’ve ever made on any line of credit. When you apply for a credit card or a loan of any sort, your lender will review your credit report and if they believe your consumer credit worthiness is up to their standards they will grant it to you.
However, there are many factors that create your overall status:
- Payment Record: If you have a history of paying late or under the agreed amount per month, that will negatively affect your credit report.
- Debt Control: Creditors will look to see if your debt amount fluctuates or you keep it steady. Having control illustrates responsibility.
- Longevity: The longer you have good consumer credit, the better. If you have kept a solid credit score for several years, you have a much better chance of getting approved.
- Outstanding Debt: Having a few maxed out credit cards is not a promising attribute when you’re applying for another. Keep your debt around one-third of your limit. Each of these factors plays their own unique role in constructing your credit report, and even if one of these falls under a certain guideline you can face problems. You must remember that your credit report traces back to the very first purchase you ever made, and any mistake will appear for your future lenders to see. Depending on the type of loan and the amount you are asking for, most lenders may look back at your entire credit history or just the past few years. Either way, the value of your consumer credit is in question and you want to have the right answer for them.
In a way, your consumer credit and credit report is the building blocks of your credit report. Every month that you have paid off a debt is one brick in the structure, and if your payment is on-time and in-full your consumer credit building block is strong. If you’re late or don’t pay enough, your brick will be weak. If you miss a payment altogether, there will be a gap in the structure. No matter how many strong consumer credit building blocks you have, if there are any gaps your credit report will be fragile. If you have a sound payment history, your credit report will be solid and admirable. You hold the ingredients to make your consumer building blocks as strong as they can be, so do yourself a favor and make sure you construct a sturdy credit report.
