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Bad credit Personal Loans – Factors that affect your credit rating and tips how to improve it.

Bad credit Personal Loans

Bad credit, which is less than 620 FICO score, doesn’t stop you from getting $5,000, $10,000, $35,000 unsecured personal loans for Bad Credit necessary to cover your financial emergency. There are a lot of lenders ready to approve you for this money not paying attention to this criterion. They take into account other points such as your employment history, monthly income, the property you own, etc. Learn more how to do it reading our research.

Many Americans who pay bills on time think they don’t have any reason to worry about their credit. But sometimes when consumers apply for a car loan, mortgage loan or any revolving credit they can’t get the lowest rates available due to their credit score. This is because paying bills on time is only 35 % of your credit score! The remaining 65 % are common among other factors that affect your credit score.

The most influential factors for your FICO score are your payment history and the amount of debt you owe (65%), alongside the length of your credit history, your credit mix, and new credit/inquiries (35%).The most commonly recognized is the FICO credit score; while Experian, Equifax and TransUnion are the biggest official organizations maintaining records for practically everyone in the USA. VantageScore is rather new; it was created to provide to lenders risk assessments across all three reporting agencies.

For VantageScore, the most important factor is your payment history. The next are your age and types of credit you already have, combined with how much of your credit limit is in use.

Each lender independently determines what is a good or bad credit score. It can also vary according to the Credit Bureau you apply to and according to the type of loan you are applying for.

However, there are several general score ranges:

  • Excellent/very good credit score: 700 to 850
  • Good credit score: 680 to 699 (Average American score is 682)
  • Average/OK credit score: 620 to 679
  • Low credit score: 580 to 619
  • Poor credit score: 500 to 579
  • Bad credit score: 300 to 499

Use your credit. What is the result?

30 % (which is almost a one-third) of your credit score depends on how much of your available credit you are using. For example, if you have a loan amount of $100,000 and you use $ 90,000, your credit score will decrease. The increase is received by those consumers who have similar credit lines and they use $ 9,000.

New vs Old

How long have we kept the line of credit open? How long have you thought about it? Some consumers “exchange” credit lines for other credit lines because of special offers made by credit card companies. It’s not always a good idea. After all, 15 % of your credit score is determined by the duration of your credit accounts. The longer you have had an account, the better in most cases. To calculate take all open credit accounts, take the time they were opened and the “average duration”.  For example, you have five accounts that were opened five years ago and five accounts that were opened less than a year ago. In this case, new accounts will be counted against you.

Do you want to open new credit lines?

Have you decided to suddenly open a new credit line? Are you aware of the dangers of this decision? For example, a new homeowner can open a new account with a home improvement store, a general retail store, etc. to help them furnish and renovate their new home.

Danger! Don’t forget that this is a NEW line of credit! There is no established history on these new credit lines. Without thinking about this point, you can lose 10% of your credit rating.

Mix of credit lines

Let’s say you are a consumer with only a mortgage and a single credit rating. In this case, you’ll be in a better position on credit scores compared to a consumer who has multiple credit cards, a mortgage, and a car loan. 10% of the credit rating will be the types of credits you have. And the more various your open credit lines are the better.  While it is impractical to open new credit lines simply to show a variety of types, with installments, retail credit cards and traditional credit cards.

Planning for your future

Information about forming your credit score is the most important tool you have when you’re buying a home or refinancing your current mortgage. Consumers should be aware of factors that affect their credit rating as well as factors that do not affect their scores. If you consciously approach your life, you will make a plan of conscious actions for the next 5 years. It may include, for example, buying a house. You should visit a financial advisor, tell about your goals. Ask a counselor to do a credit check for you. This way you can see the exact picture of your current loan. You can also get invaluable advice on how to improve your credit scores.

There’s nothing you can’t do if you plan ahead and put your mind to it!