Factors you should remember to lead a tension free & financially fit life.

Let us think of a situation where, for example a person has taken a loan, spent it and failed to repay it on time. After 1 year the person again applied for a loan for a trip to France with his beloved wife. But this time the bank refused to sanction the loan. This situation can easily shatter a person’s dream and similar situations are happening everyday in various parts of the world. But people often overlook few factors which are very important in deciding one’s future. Whenever we get a sum of money we spend it in an unplanned way. But the fact is wealth comes when money works for us and to make it work we must take care of some basic factors which will really help in judging where we stand and what we should do, to lead a tension free and hassle free financial life

Credit Report

It is one of the most important factors one should take into account before a fresh loan application. As per the federal law one can get a free credit report every 12 months form each of the three national credit reporting companies. This report is a snapshot about one’s creditworthiness and it will tell how much a person is eligible to get a loan .Online facility is also there and annualcreditreport.com is such an authentic online source.

Timely payment of Bills

This factor must be always taken care of as failure in paying the bills timely can easily hamper or lower a person’s credit score. If a person cannot pay the bills timely due to work pressure or lack of time it is advisable to go for automatic payment modes available in almost all the Banks. But there must be enough amounts in the account to avoid overdraft fees.

Factors which determine your credit score

Timely payment of bills: Late payment always will lower down your score. so it must be always avoided

Outstanding debt: If the amount of debt is close to the credit limit then it is regarded as a negating factor and your score will come down. So such a situation must be avoided to improve your credit score.

Duration of credit history: A short credit history is always a negative factor in deciding a credit score, but it can be balanced through timely payment.

Number of new credit application: If you have applied for too many accounts within a short period of time, it will act negatively in deciding your credit score.

Types of credit accounts: The credit scoring models often consider the number & type of accounts in deciding the score. If your account is a mix of installment loan and credit card account then it can improve your score.

You can yourself improve your credit report:

It is a dynamic system introduced by the federal Trade commission through which a person can himself/herself improve his/her credit report by correcting the errors. You can directly go to their website (www.ftc.gov) to do the same.