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Be a Great Applicant Despite a Bad Credit Score

Posted on November 17, 2011

A bad credit score can hold you back from a lot of things – buying a car, owning a home, getting good insurance rates, and even from getting a job. Most of the time, your credit score isn’t the only factor that’s considered when you put in an application. Don’t be an all around bad candidate just because your credit is bad. Look great – on paper – even if you have a bad credit score.

Don’t keep making credit mistakes.

The older the negative information on your credit report, the better you look. So, from now on, make sure you pay all your bills on time. Remember that creditors report 30 day late payments, so if you missed your due date by a couple of days, make your payment before the next statement arrives. You’ll still face a late fee, but you’ll avoid having the late payment being entered on your credit report.

Pay off some debt.

You’re a better candidate for credit cards and loans when you have less outstanding debt. When you do have credit card balances, it looks better when those balances are below 30% of the credit limit. So, if you can’t afford to pay off all your balances, at least pay down the balances that are close to the credit limit.

Keep your applications to a minimum.

Even an applicant with a great credit score looks risky when they start applying for several credit cards all at one time. Space out your credit card applications. If you’re denied, wait six months to a year before you apply for a credit card and definitely avoid taking on more credit cards than you can afford to pay back.

Be a good driver and avoid insurance claims.

If you have a bad credit score, chances are you’ll pay a higher insurance premium. But, don’t make matters worse by getting speeding tickets and fender benders. You may be able to get an insurance discount by taking a defensive driving course, so find one in your area. Your local traffic court or DMV can give you some information about traffic courses near you.

Have a bigger down payment.

For big loans like a car loan or mortgage loan, you can improve your chances of getting approved, even with a bad credit score, if you have a big down payment. The more money you can put down, the risk the bank takes on when they lend you money. Banks are typically more comfortable lending money when you have more equity in the asset.

With jobs, have some good references.

A bad credit history can keep you from getting a job. While employers don’t check your credit score, they do sometimes review your credit report, which directly feeds into your credit score. Offset a negative credit history with good references from previous employers and other people who know you well. If you can walk into the job interview with reference letters in hand, it may help your ability to get hired from a job.

Having a bad credit score can handicap you in some ways, but with some work, you can overcome the limitations of a bad credit score.

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