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When working with people
on credit issues and dealing with the complexities of a credit report
score, one notices without question that the debt to credit ratio
is important. The debt to credit ratio can have a huge effect on
that important home or auto loan or that needed business loan. However
when balanced correctly, in accordance with the set standards for
good credit from the credit reporting agencies, the debt to credit
ratio can provide the much needed improvement for your current credit
score.
People are constantly
commenting on what a good idea it is to make sure and pay off all
of your cards every month in full to make sure to establish good
credit and show that one can pay their bills. This is such a misconception
and only leads to confusion. Having a revolving balance kept at
the right percentage compared to your debt and you are on your way
to a better credit report.
Learning about your
debt to credit ratio can be one of the important steps to putting
yourself in the right frame of mind for credit success. For most
Americans the debt to credit ratio is to high and it can be hard
to obtain any new offers or loans from banks or financial institutions.
For example, you have resolving accounts totaling $10,000 but you
currently owe $8,000 which gives you an eighty percent ratio, very
high for a buyer of a finance deal to even take a second look at
you.
Lenders make the bulk
of their money through charging interest, not sending out pretty
square cards or annual fees. When looking at any model designed
for credit scoring, it likes you to maintain your balances and pay
over a length of time and it is driven with your ability to do this,
amongst other things.
Being a lender in an
institution, if I could see that over a long period of time, you
had been able to maintain long-term credit worthiness with a company,
it would prompt me to want your business and "interest"
as well. As a lender, I know the type of customer that I want to
solicit my loans to.
Sub-prime Merchandise
Cards can be a great way to balance your debt to credit ratio while
still warranting that $350 purchase for that lamp you HAD to have
at Macy's. Sub-Prime Merchandise Cards are simply cards carrying
a line of credit to buy merchandise from a specific merchant which
in most cases turns out to be the company who originally sold you
the card.
Some marketers,
perhaps due to their obvious benefits to the consumer, have started
to market these cards while misrepresenting and misunderstanding
how they work in their advertising campaigns. Sub Prime Merchandise
Cards report to one or more of the three credit reporting agencies
and can help to even out your percentages quickly when it comes
to debt to credit ratio.
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