Negative Things in Your Report that Scare Away Lenders

What negative things in your credit report can scare away potential lenders? Although your credit file may be free from bankruptcy, foreclosure and other derogatory remarks, some things can still raise the red flag to lenders who will review your application. What are these things? Take a look at this checklist: 1. Multiple account applications. Each time you apply for new credit such as a new credit card or a loan, an inquiry will be made by the company you submitted application to. All credit inquiries will be reflected in your report so other creditors will be able to see whether you are applying for credit cards or loans. Trying to acquire multiple credit at the same time can hurt your chances of getting approved because some lenders may doubt your capability to manage too many accounts and payment obligations. 2. Being a co-signer. Co-signing an account for a friend or family member may be a generous act but you should be aware that it is a serious duty. When you co-sign a loan for example, the repayment responsibility is placed upon your shoulders. In case the primary borrower fails to keep up with repayment, you agree to take over the obligation as if the debt was your own. Needless to say, if you are going to apply for your own loan, a potential lender may have second thoughts about granting approval if you are already loaded with repayment responsibilities as a co-signer. 3. Paying just the minimum. If you usually pay only the minimum amount due from your credit card balance and leave the rest of your debts unpaid, potential lenders may regard you as a risky customer. Instead of getting approved quickly, a lender may actually refuse to grant approval thinking that you might encounter debt problems sooner or later. 4. Questionable credit card use. If you often use your credit card to take out cash advances, such activities may send a negative impression to a potential lender. Cash advance features may be convenient but these transactions are expensive as well. Take note that cash advances are not covered by the grace period and usually carries a much a higher rate. Cardholders who use this option are usually experiencing financial trouble and are badly in need of cash. Thus, a potential lender reviewing your credit profile may conclude that extending a credit line at this point would be a risky move. 5. High credit-to-debt ratio. If you maximize your credit card limit or exceed your credit lines, then many lenders will instantly consider you as a high risk borrower. With that said, your application may easily get decline. rnFurthermore, maximizing your limit can badly damage your overall rating since 30% of the FICO score is based upon credit utilization. For this reason, financial advisers recommend keeping your credit usage at a minimal level. This means, you should watch out your credit card charges even if your issuer offers zero interest rate or a low rate.