4 Items On A Credit Report That Discourage Lenders.
What is a Credit Report?
A credit report or credit history is a record of a borrower’s responsible repayment of debts. It includes credit history from different sources.
As important as it is to keep a clean record history, repaying your loans on time or doing all the right things doesn’t guarantee a top credit score.
How do you feel when you’re given a very high-interest rate when you apply for a loan or when you’re told to ask again later? Bad right?
Well, that’s because something may be wrong with your credit report.
Aside from late payments or missed payments, there are other factors on your credit score that can diminish your credit score and make your lenders cautious of you.
Here are the top four credit items that make lenders cautious and how to avoid them.
Too Many Loan Applications In A Given Time:
As much as you can, avoid this!
Opening a new loan account with your bank or taking one more loan from another loan app isn’t an issue. But when you begin to apply for loans in three to four different online loan apps or banks in a short time, then there may be an issue. This will indicate that you’re desperate and you’re trying to stay out of debt. This is a big turn-off for lenders.
Doing this may also indicate that you are unstable and in a bit of financial trouble. You would not want your lenders to see that.
Being A Guarantor:
As long as you’re not planning to take a loan, then being a guarantor is good. If otherwise, you may have to rethink being a guarantor for a loan.
When you do this, that is signing as a guarantor, the entire debt reflects on your credit report. You don’t want your lenders to see that.
To them, you’re the owner of the debt until it is fully settled. It will be included in your debts when you decide to apply for any loan.
So before co-signing that loan, think twice. Don’t co-sign as a guarantor if you’re planning to take out a loan soon.
History Of Partial Repayments:
This is bad for your credit report, avoid it as much as you can!
I know you make these partial repayments to avoid loan defaults, but it affects your credit report negatively.
When lenders see this, they’ll assume that you’ll do the same to the new loan, and they may be reluctant to grant you credit.
Occasionally making partial repayments isn’t an issue but doing so frequently is. It’ll indicate that you can’t pay off the balance.
Lots Of Hard Credit Enquiries:
You may not know this but every time you apply for a loan, your lender requests a credit report on you. The impact of the credit report inquiries varies by the borrower, credit score, and the number of confirmed inquiries.
Too many inquiries on your credit report can affect your credit report in a bad way. Totally negative.
If you ever need to make inquiries on loans, only do so when it’s necessary.
Conclusion
It is important to always remember that the above-listed factors are big red flags for credit reports.
Although these factors are major, they are not the only factors that can turn off lenders from giving out loans. Avoid all possible trouble and you’ll be fine to take loans for as long as you want.