Throughout life, individuals build up something known as credit history, which is how companies and lenders determine your eligibility for loans, services, vehicles, and other necessities and desires. Credit is a large factor in where you can live and can even determine your candidacy for certain professional positions within organizations.
Even though credit is incredibly important, not many people understand its importance or how to build, improve, and protect their credit history and score. Three common issues that individuals can face regarding credit include a lack of credit history, denied applications, and identity fraud. Let’s explore these problems and how you can resolve these issues.
Lacking Credit History
There are many that believe not having credit or credit history is a good thing. The lack of credit, however, can actually negatively impact your history and create issues when it comes to getting loans, credit cards, and taking advantage of other lending services. No credit history, or limited credit history, is actually quite common.
In fact, one-tenth of adults do not have credit history and many more lack significant credit history, which can be too little to generate an actual credit score. Lacking credit history makes it difficult to rent a vehicle or residence and can also cause problems when applying for loans, procuring utilities, getting a cell phone, and more. You can fix this issue, though, by taking a few simple steps.
How to Fix It
There are many things you can do to fix your credit and build it – even from scratch. One way to do so is by getting a personal loan from lenders that work with individuals with bad credit, such as . Staying on top of payments and making them on time is another way you can build credit history and keep improving your score.
Be sure to pay very close attention to companies reporting to credit bureaus, like retail credit cards, secured lines of credit, and credit builder loans. Paying bills to these collectors on time can greatly build and continually improve your credit history.
Denial of Credit Applications
Applying for credit lines, cards, or loans can be an exciting time, giving you the chance to make purchases and pay them off in installments. However, credit applications can be denied for a number of reasons and leave you wondering what to do next. If you’ve been denied, there’s no reason to worry – you can get approved by taking action.
Let’s look at some of the steps that can be taken to reduce credit application denials and improve approval chances.
How to Fix It
The first thing you can do is find out why you have been denied by a lender. According to the Equal Credit Opportunity Act, or the ECOA, companies must divulge this information if the individual requests it within 60 days.
Your next steps will depend on why you have been rejected, as you may need to build up your credit or correct errors in your credit report. In some circumstances, specific information may be requested that allows individuals to take further action and improve their chances of being approved for future applications.
Waking up one day to find that your identity has been stolen and used for fraudulent activities can be frustrating and scary. In these situations, you may spend a lot of time trying to correct the damage done by criminals using your information. However, you can prevent identity theft and fraud from occurring by taking preventative measures, protecting your private data from illegitimate individuals.
How to Fix It
To prevent identity theft, review your credit report on a yearly basis to ensure that only your information is present. If you find any inaccuracies, report them immediately and consider taking additional steps, such as placing fraud alerts or security freezes on credit reports or taking advantage of services like credit monitoring.
Professional help may be considered when it comes to building or fixing your credit, giving you a more in-depth look at what you can do to improve and protect credit history and score. By getting additional help, you have a much better chance of fixing credit issues in much less time than it would take on your own.
By knowing how to manage your credit history, you can find problems quickly and correct them before they lead to further issues and consequences. Building credit can take some time, but you can get a higher score by taking action, reviewing your credit history, monitoring your credit, and more.