The coronavirus pandemic has caused financial hardship for many real estate investors. Salary reductions, layoffs, and business closures were all affected. After the moratorium ended, some people failed to pay their loans and credit card bills on time. As a result, people lost their credit scores. A good credit score is important for your future financial prospects because it can help you qualify for a home loan with lower interest rates or a credit card that rewards you with points or cash back when you spend. That is why, while working on your finances, you must improve your credit score.
What is a Credit Score and why do you need to maintain it?
A credit score is a numerical representation of someone’s creditworthiness, or ability to repay a loan. The number could be anywhere from 300 to 900. The credit score of a borrower improves how he or she appears to potential lenders. The credit score is determined by the payment history and the amount of debt you owe of credit bills.
Do you intend to take out a home loan? These recommendations are for you! Continue reading to learn how to go for the credit score improvement and get a good property loan deal from your lender.
- Keep any accounts that aren’t in use open: – It’s better to stop using a credit card than to close the account if you’re not using it. Closing a credit card account, depending on its age and credit limit, can harm your credit score. You can keep them active by paying a mobile bill or an electricity bill now and then. To keep your card active, purchase at least once every six months.
- Maintain a low credit utilization ratio: – In calculating your credit score, your credit utilization ratio, also known as your credit limit, is a critical factor. To avoid harming your credit score, keep it under 10%. Consolidate a property loan to pay off debt if your credit utilization ratio is high. This will improve your credit score.
- Keep track of your bills and pay them on time: – Missed or late payments can have a seven-year impact on your credit history. To avoid damaging your credit score, try to pay your bills on time, at least the minimum amount due each month. If you do not make a payment by the due date, it will be assigned to a debt collector after 30 days.
- Keep your identity safe: – Your personal information can be used by cybercriminals or hackers to open credit accounts, make purchases, borrow money, and transfer funds. This activity, if left undetected, can have a significant impact on your credit score.
- Regularly check your credit report: – Another way to improve your credit score is to review your credit reports on a regular basis to ensure that they are accurate and free of errors. This way, you’ll be able to spot any errors or fraudulent activity early on and report it to the credit company before it has a negative impact on your credit score.
Your credit score is a single number that has the potential to cost real estate during a pandemic or save you a lot of money over the course of your residential property investment.
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