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(NC)-Incurring debt is part of life for
most people. Understanding how best to handle credit will help
you maintain control of your overall financial situation.
Strong credit leads to quick credit
approval at the best possible terms. Your credit history must
clearly show your willingness and ability to pay your debts.
Your Credit Report
- During the application process, lenders
look at your credit record and credit score to check how you've
managed your debts.
- It's a smart idea to review your own
credit report and score before applying for a loan.
- For a small fee, a credit bureau will
provide an instantaneous, complete online credit report and
credit score that details your current debts and payment
history. They also detail what your score level means, how you
compare to others, and provide tips to improve your score.
- You also may receive your credit report
(without the credit score) by mail for free by contacting the
credit bureau.
- When you receive your credit report,
ensure that all the information and amounts are correct. Look
carefully for any past-due or written-off amounts. Uncertainty
and ambiguity on your credit report can be dangerous to your
financial health.
Correcting Credit Problems
- If you have never had a loan or credit
card, you can still show a good record of timely payments of
your utility bills, property taxes or rent.
- You can establish minor credit
relationships, such as short term installment loans or a credit
card, and maintain a record of prompt payments.
- If you have a credit problem because of
an unusual situation, write a letter of explanation. Your lender
may overlook a credit problem if you can give a good reason for
not having made your payment.
- If you're constantly struggling to pay
your bills, seek professional help. Remember: creditors don't
want to lose money. Let them know if you are having trouble with
your payments. Most creditors will work out alternative payment
arrangements to help you maintain a good credit rating.
Credit Tips
- Plan major purchases carefully and do
not accumulate excessive amounts of debt.
- Pay down existing debts and ensure bills
are paid on time, especially minimum payments on credit cards.
If necessary, postpone major purchases until you can save the
money required.
- Avoid large purchases before buying a
house, since the added debt will affect your mortgage
qualifications.
- Use credit responsibly. Establishing a
track record of on-time payments will improve your credit
rating.
- Avoid skipping bills to make other
payments since missed payments appear on your credit report and
create longer-term problems.
- Avoid defaulting on payments. Delinquent
payments, collection items, and court judgments stay on your
credit file for six years, even if you subsequently pay them.
- Save money regularly for financial
emergencies. You also can arrange for credit lines to cover
short term cash flow payments, but resist utilizing them on a
long term basis.
For additional information or to access a
link to a credit bureau, visit GE Mortgage Insurance Canada at
http://www.gemortgage.ca.
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