Given the importance our company attaches to credit rating, it is not surprising that the events capable of exerting an effect on it are almost innumerable. That said, always remember that this rating only measures one thing: the level of risk you put to a financial institution or a private lender that lends you money. It is clear that events and purchasing tools that have no impact on this rating are just as numerous. With so many choices, it is important for people in financial rehabilitation process to be able to differentiate the kind of tool and event that will have an effect of the kind that will have point.
The simplest method of separating what will affect what will have none is to memorize the formula that credit bureaus use to calculate their ratings. In short, the rating is based on an individual’s credit history, the length of the history, the type of credit the consumer consumes, and the number of recent inquiries that the individual has initiated. If an event or a purchasing tool does not affect these factors, they will have no impact on the rating itself. It is important to note, however, that since the credit score is not the only factor to consider when applying for a loan, there are tools or events that will not affect the credit score. but which could affect the approval or refusal of a loan application.
Debit cards offer several advantages very similar to the benefits offered by credit cards: they can, for example, be used to make purchases online or to replace the need to have cash in hand. They also offer protection against liability and fraud. However, since debit cards draw their funds from your existing bank balances instead of drawing on a line of credit, their use has absolutely no impact on your credit rating. In short, they are ideal for individuals seeking to control their expenses. Their use, however, can not rehabilitate a credit rating.
A decline in income
Yes, a drop in revenue can probably affect your ability to get approved when applying for a loan, but it is not due to an effect on your credit rating. Rather, this impact is due to the effect of lower income on your debt-to-income ratio – one of the most important factors (other than credit rating) when you are assessed for a loan.
Of course, a decline in income can make it more difficult to make regular payments on your existing debt and if they are missed or late, you will certainly see a drop in your credit rating, but this is a consequence of failures in payments. and not a direct result of a decline in income.
A refusal of credit request
Yes, a loan application often generates a credit check and yes, it can have a negative impact on your credit rating. It is not the case, however, that a denial of demand will have an additional effect. That is, yes, if you make multiple credit applications in a short time may indicate that you are desperately looking for a loan and may therefore have a harmful effect on your credit rating, but these are the surveys and not the refusals that are problematic.
Remember, however, that you have the legal right to receive an annual copy of your no-cost credit report, which is helpful in helping you understand the reason for your refusal, and what will allow you to develop a strategy. for your next application to be accepted.
Stop using your credit products
The decision to stop borrowing temporarily can be a useful strategy to regain control of your finances and reduce your existing balances. In addition, this decision has no impact on your credit unless a consumer makes the drastic decision to close their accounts, or if the accounts are closed due to a prolonged period of inactivity. Closing accounts affects the credit rating because it removes the transaction history associated with the debt of its credit rating, which can affect two of the factors that are used. when calculating your rating.
If you get married, first: congratulations! Then, be aware that this gesture has no influence on your credit rating. Yes, your civil status could have an effect on your approval if you were to apply for a joint loan, but this is because a joint application takes into consideration the financial position and the credit rating of both parties. In addition, this type of loan may also affect the rating of both parties, so it is important to ensure that the associated payments are always made because you are no longer the only one affected ( e)!