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A Note on Credit Rating and Debt Management

By: Paul Augustus Click author's name for more of his/her articles

Information is the vital ingredient that governs business and commercial transactions in the connected world that we live in today. It is because of the easy accessibility of various information sources that we are able to develop our economy in the pace at which it is growing over the past few decades. When it comes to loans that are extended by financial institutions, it is information on the prospective borrowers that is paramount in aiding the loan officer in deciding on whether to extend the line of credit or not.

One of the important factors in improving your rating with the agencies is a steady repayment history. There is no substitute for promptness and it is by repaying all your debt in time that you can build a good credit score for yourself. This is not to say that you should not take any loans. You should exercise sufficient caution while taking on debt of any kind and make absolutely certain that you would be able to repay the dues on time.

Most bureaus give a current or positive rating to people who pay their bills within the stipulated time period. For instance, if you have got a fortnight to pay off a particular bill, you will have to see to it that it is cleared within the allowed time limit to ensure a good credit rating. Those who take more than the allowed time to pay off a particular bill will be rated unfavorably or negatively by the assessing agency. Unused credit lines are considered as debt as you could use them anytime and therefore these form a part of your final score.

One notion that some of us hold is that the bureaus make a decision about the creditworthiness of individuals. This is not the case as the bureaus are just collators of information that is verified and validated before it is fed into the financial model that sets out a score based on your repayment history and financial dealings with lending institutions. If you are interested in getting your financial rating file, you can contact the rating agency and request for a copy after furnishing all the details as required by them. Some agencies like experian offer free reports on getting a request from you. If you have your credit report with you, it is a definite advantage as you have information that can be used by a loan officer when processing your request for a loan.

Another advantage of having the information that the bureaus have generated about your financial behavior is that you can be aware of the inconsistencies in the report, which if let unchecked can affect your chance of getting a loan. This happens usually as the financial institutions occasionally make some errors of omission in reporting your dealings with them. If there are any disputed facts you have to request your lender to reinvestigate the facts and ask them to inform the credit rating agency and delete any remarks that are inaccurate or unsubstantiated.

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About The Author:

Paul Augustus is author of this article on Financial Divorce. Find more information about Credit Score Calculations here.