Did you know that your credit score is one of the most important factors lenders look at when considering a loan? There is no one-size-fits-all answer to credit score building, but there are some basic principles that hold true — a high credit score means that you are a low-risk borrower, which could lead to lower interest rates and better terms on loans. Moreover, if your credit score is low, it can cost you money in the long run. But what if you are starting from scratch?
Building your credit score can seem daunting, but with a little work and some patience, you can improve your standing and establish a good credit history. So, whether you are ready to start your own business or you are simply looking to purchase your first home or car, read on for some advice on how to boost your credit rating in Trinidad and Tobago.
First let’s look at what is credit building. This is when someone starts from zero and makes all their payments promptly and successfully in order to show lenders that they are responsible with money and would not default on a loan in the future. If one has great or exceptional credit, one can qualify for loans at very low interest rates.
Building credit is a gradual process and takes several years to complete successfully. If you do not have credit history yet, it will take time to establish proof of successful borrowing, however there are ways to build your credit:
Building credit with a secured card shows that you can pay off your balance in full and on time every month. This option can be a good way to get started because secured credit cards allow you to automatically build your credit rating. However, remember credit cards can be risky. Limit the number of credit cards you own so you can keep up with your expenses and stay within your budget –do not spend what you do not have.
Put at least one type of major loan like a mortgage, student loan, or car loan on automatic payment. This is an important step in building a high credit score. It demonstrates that you are able to meet your financial obligations on time, which lenders look at before offering further credit.
Building a positive history of paying off major loans can help you build your credit rating. You do not need to open several accounts all at once—start with one or two loans and slowly add more when it feels comfortable. Just make sure you always pay them off in full each month so that your payment history will continue to improve over time.
Getting a loan is difficult when you do not have any credit history. Luckily, when you apply for a loan with a guarantor who already has good or excellent credit, then you might have an easier time getting accepted for credit. However, you must be mindful that if you default on your payments, the lender may go after the co-signer for your outstanding loan.
Building a credit score is important, but it can be difficult to do so especially when one does not know the first step on how to go about doing this. Use these tips to help build your credit rating and be pre-approved ready when you are prepared to take out a Fidelity Finance loan.
Fidelity Finance and Leasing Company Limited offers personal and commercial loans, mortgages and fixed deposits with some of the best interest rates on the market. Interested in loan?