The qualification for any major loan such as a mortgage or an automobile loan depends heavily on having a healthy credit history. Not having used credit much in the past may mean that you do not have a comprehensive credit history that tells the lender whether or not you are capable of handling credit. Not having used any credit in the last six months may also mean that you will not have a credit score at all. Different credit scoring models require accounts to be updated and current data to reported at least once in a certain period of time which can range from 6 to 24 months. If you happen to use credit marginally and infrequently you may find that your credit score is marginal as well. This may prevent you qualifying for a mortgage or an automobile loan.
In case you are now interested in raising your credit score to you can qualify for the loan that you want you should first consider getting a copy of your credit report and a credit score from the National credit bureaus in order to determine which and what factors affecting your credit rating the most. You can get a risk factor statement which your lender may be able to provide. By addressing the risk factors you may be able to better your credit score. Remember that time is of essence if one is looking to improve the credit rating.
Any change that you make in the way that your debts are being reported such as paying down the balance on your credit card may not have an instant effect on your credit score. It is also possible for the credit score to actually dip get before it increases. This is because a credit score also considers the consistency in the pattern of positive payment history. Any change in your pattern of consumer data may cause the credit score to reduce initially before it stabilizes and becomes more positive.
While paying down the balance on your credit card is a change that you can make quickly in order to enhance your credit score, low balances and other indicators of response will credit use are necessary to have a good credit score. You should also remember that if there are other negative factors affecting your credit score such as late payments, collection accounts and other credit mismanagement issues then paying down the balance on a single account may not affect your credit score much as it is being influenced by other negative factors as well.
If your credit score is marginal due to the fact that you have not used credit much in the past then you can start to build a healthy credit history from the day on by showing a responsible and moderate use of credit. Using your credit cards every month, keeping a low balance and paying the balance of every month will soon have your credit report showing favorable information.
However, if the reason for negative and marginal credit score is that you have unpaid debt and face problems with repaying the money you have borrowed then you should reconsider applying for further loans. Especially loans that are substantially large sums such as a mortgage for a home or an automobile loan. Before taking a very large debt to buy a home or an automobile you should try building up savings or the purpose of either making a down payment or building a security net financial emergencies..
If it is only a matter of limited credit history which isn’t comprehensive enough then you may get the lender to approve you for your loan application by providing other proofs of income and assets that are show that you are financially sound incapable of repaying a large debt.