START HERE
Get a free car loan eligibility assessment and compare offers tailored specifically to your circumstances.
Loan Amount:
$
Postcode:
All finance quotes are provided free (via our secure server) and without obligation. We respect your privacy.
Any Purpose
New car purchase
Used car buyers
Refinancing
Private sale
Dealer purchase
Any Situation
Refused by Banks
Self-employed
Bad Credit History
Low/No Deposit
No Savings History
Ex-bankrupt
All Features
Secured Car Loans
Unsecured Finance
Vehicle Leasing
Hire Purchase
Chattel Mortgage
Major Banks
Non-bank Lenders
Lo/No-doc Loans
Knowledgebase
Guarantor:
A party who agrees to be responsible for the payment of another party's debts should the original party fail to pay or perform according to a contract.
Car Loans Australia :: Articles

Car Loans Australia Articles

Credit Cards: Reasons Why Your Credit Rating May Drop

Credit rating is very important. It is used to determine how much interest you need to pay. It is also a reflection of your creditworthiness. If you have high credit rating, you can enjoy lower interest charges on loans. Apart from that, you also get higher credit limit and great deals on your credit card. If you find that your rating has dropped significantly, this may mean that you may have made a financial mistake.

There are a number of reasons why you may suddenly have a lower score. If you know what these reasons are, there is a chance that you can avoid or at least fix your current dilemma. Here are some possible causes of abrupt score drop and how you may be able to avoid them.

Late Payments

Your payments reflect 35% of your FICO score, regardless of whether you pay on time or not. If you missed a payment, this will not completely damage your rating. However, if you turn this into a habit, your score will eventually be affected. Moreover, your creditor may charge you with more fees and you may likely end up having to make many more payments, which could include your credit card bills, immediate fees for missed payments, and charges on credit lines and later, loans. The only solution to avoid all these is to pay your bills on time.

New Credit Card Application

Applying for a new card when you are struggling with paying another can hurt your credit score. Know that 10% of your credit rating is made up of new inquiries for credit. New card applications will show on your credit report for 12 months. If you wish to get a new card, do so with control. If you are to make an inquiry, do it only once as much as possible. One inquiry is acceptable since your score can rebound within a year.

Credit Card Cancellation

You have the option to close your account if you have credit card debt. However, doing so will actually damage your score, especially if your account carries a balance. Another possible scenario is that creditors may cancel your account. Both scenarios can have an effect on your rating; therefore, avoid credit card cancellation as much as possible.

Unemployment Benefits

If you are unemployed and you get benefits, this will have a slight effect on your score. It is advised that you receive the benefits for a short period only. Although the credit bureaus will not find out if you are unemployed, they will certainly see that your income has decreased.

High Credit to Debt Ratio

Your extended credit will take 30% of your credit score. Sudden increase in balances without higher credit limit will result to a score drop. If you have balances, strive to pay them off as soon as possible.

Poor Debt Management

Credit score is not only about what you do with your credit cards. There are other factors that can influence your score. These include your lines of credit and loan balances, which comprise 30% of your FICO score. If you have too much debt, your rating will definitely go down. It will also be difficult for you to afford the payments each month. Hence, you should be able to manage your debt by lowering the amount of money you owe from various financial institutions.


Article Source: http://EzineArticles.com/7229490


Finance Articles

Home Loan Refinancing - the Pros and Cons
AUSTRALIANS reckon a change is as good as holiday, and some homeowners are pulling out all stops to prove it. read more

18 fundamental money rules to live by

In a financial environment where everything seems to be getting more and more complex, it is essential that you anchor your own financial future with some sound principles.

read more

The Enjoyable Road to Debt Freedom
With summer coming up, some of us are braving the high fuel prices and driving to family gatherings or favorite vacation spots. What route would you take? Any experienced road traveler... read more


Finance News

Personal Loans to help Australians in need: FSO
Oct 29 :: As Australia prepares to clean up following devastating fires and floods, Financial Services Online CEO, Andrew Clark, has announced a package of personal finance solutions designed to... read more

Small business loans to help Aussie businesses through tough times
Nov 27 :: Financial Services Online has today announced a new credit facility for Australian business customers who are seeking loans for amounts of up to $10,000 with minimum security requirements,... read more

Police issue warning about bank scam
Nov 20 :: Melbourne police are warning people about a scam in which fraudsters pose as bankers and ask for money.They say they cold call customers and tell them they have been overcharged... read more