Think Like a Lender

If you think like a lender, you can see which habits and traits you need to develop in order to be considered a good credit risk. Thinking like a lender will help you understand how you must manage your money to be appealing to lenders. There are few tips that can put you into the right mind set:

Tip #52: Know how money works.

Reading books about money and understanding how your accounts and loans work can go a long way towards helping you keep your credit in good order. For example, if you know that some loans will charge you extra if you pay off your loan faster while others will not, you will be in a batter position to make financial decisions.

Plus, the more you know about money in general, the more comfortable you will feel with it and the better decisions you will be able to make, which will help improve your overall financial state and will help you keep your credit in good shape.

You don’t need to do heavy-duty research to appreciate how money works. One easy way to consider money is to think of it the way you think of time. You likely hate to waste time and you want to make the best use of it possible. Apply the same attitudes to your financial life and watch your finances soar!

If overspending has caused you to have a bad credit score, consider the following sneaky mind set trick: equate your money with your time. For example, if you make twenty dollars an hour, then a magazine subscription of $20 will represent one hour of your work.

Imagine an hour of your work and ask yourself whether the subscription is worth the time you put into the twenty dollars. Once you start seeing money as something that comes from your hard work rather than a general “thing” impulse spending will seem much less attractive, and it will be easier to keep your credit card limits low and you bank account stocked up with cash!

Tip #53: Take care of those things besides a credit score that affect how lenders view you.

Lenders will often look at not only your credit score but at other financial indicators, such as your income, employment record, and savings. Keeping these things in order can complement your credit score and can help you get good overall credit. Some lenders have their own ways of calculating credit scores, so keeping your overall financial system in good shape is one way to ensure that you are in good shape in all lenders’ eyes.

Be aware that when lenders ask to see your credit score, the credit bureaus send not only your credit score, but also the top four reasons why your credit score is lowered. The most common reasons for lowered credit scores are:

1. Serious delinquency in repaying accounts or bills.
2. Public record of bankruptcy, civil judgment, or report to a collection agency
3. Recent unpaid or late paid debts or accounts
4. Short-term credit record
5. Lots of new accounts
6. Many accounts have late payments, defaults, or non-payments
7. Large debts or amounts owed.

Knowing that your lender sees these possible problems can help you see the need to develop the best possible face to present to a lender. Lenders who look at your entire credit report may get a more positive picture of you than lenders who see only a number and four reasons for a lower score.

Tip #54: Follow up on closed accounts.

You closed a store card years ago - but is it still listed as an open account? Bureaucratic mix-ups happen, often quite frequently. If you want to keep your credit score good, you need to follow up on financial details.

Whenever you close an account - whether it’s a credit account, bank account, or utility company account, make sure that you get written confirmation that the account is closed and paid in full and then follow up a few months later with the company to confirm the closed account. This simple precaution can save you hours of frustration - not to mention a lowered credit score.

Tip #55: Don’t move around a lot.

Lenders like to see stability - it suggests stability in financial matters as well as in your life, and makes you a better credit risk. Plus, every time you move, you may have to change your credit information - including switching banks. This actually negatively affects your credit score by not allowing you to develop long-term relationships with lenders.

Remember: Your current and past addresses are listed on your credit report even if they do not directly affect your credit score. Any lender looking at your full credit report will be pleased to see that you create a stable life for yourself. Not moving too frequently can also save you money on moving costs, which can add up quite quickly.

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