No Credit Is Worse Than Bad Credit

Credit cards are used by most of the individuals they permit the people to make a purchase when they don’t hold cash. They allow the users to pay the cash during the due of every month. Few people generally choose to make a purchase through cash by avoiding the credit usage as that may put them into trouble.

When an individual wants to make a purchase of a car utilizing the car loan schemes or need to own an apartment by applying for a home loan then the credit score plays a major role. When a credit score is held by the person by utilizing the credit card it helps them to apply for further loans without any additional processing of the loan providers.

Need for developing a credit history

The eligibility of a person can be checked through my credit file where the file contains the information about the amount borrowed along with the repayment activity. Based on this information a credit score is calculated which is used for allocation of a loan to the individuals. Loan lenders usually make a decision based on this credit score.

When a person holds a bad credit it gives an identification of risky borrower in terms of loan providers which results in an increased interest rate even though the loan is approved by the providers. In order to determine the approval of the loan, it is better to possess a bad credit than not holding a credit.

Few websites permit the individuals to check my credit rating whereby they collect the essential information required to check whether the credit rating is in the satisfied level or not. On obtaining the data such as PAN card number, email and other personal information they get access to the credit score which enables the loan providers to make the valuable decision.

Methods to develop a good credit history

In order to obtain a perfect credit score individuals should take time by obtaining a credit card from the bank and link them to their existing account. The credit card should be utilized constantly as well as responsibly during the period of usage. The credit should be obtained within the limit and to be paid off on time without any delays.

It is also stated that entire credit limit should not be utilized on each month as this may affect the debt-to-credit utilization ratio which in turn affects the credit score. Few persons may terminate their old accounts which naturally reflect in the credit history. So a better management strategy should be implemented at all times.

Individuals can carry out the credit history check then and there to identify that they are on the proper track of applying for a major purchase. Experts also advise the people to avoid creating many new accounts at the same time as if affects the overall score and it averages out the credit history also. All these activities require certain time to maintain an acceptable level of credit score which assists in obtaining a loan in an affordable interest rate. Thus holding bad credit is better than holding no credit.

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