For a lot of women, credit checks may seem daunting. This outlook largely stems from the fact that we get fewer opportunities in terms of finances nowadays. Research conducted by the NGO Consultative Group to Assist the Poor shows that one out of three women worldwide are unable to be part of the formal financial system. That's as many as 1.1 billion women. With less access to channels for building a good financial track record, you can see why credit checks can cause anxiety. Remember that credit checks, in general, happen every day. In my case, for instance, I move a lot so negotiating with a landlady is a normal occurrence. When she asks about my capacity to pay rent, that already counts as an inquiry. To verify any information given, she may request a credit check and contact my bank or employer. Some women fall foul of an inquiry even in a daily life situation like this. The good news is there are strategies you can do to help credit checks go in your favor. These will be our focus today.
Examine how you use earnings
Whether it's from salary or business, how you manage your earnings is a big part of a credit check. A post by Samantha Ettus here about saving money discussed how you can increase your earning potential, and such growth must be accompanied by a conscious effort to be more financially responsible. That's because when it comes to credit checks, it's not about how much money you make, but what you do with it. Do you have a habit of making big purchases? Do you pay in full or in installments? If you use a credit card, how much of its limit is left? A report on personal finance by Forbes mentions that it's good practice to use only 25% to 30% of your credit limit. This implies that you have proper discipline in spending. That's a shiny badge that credit check agencies will notice.
Take it easy on loan applications
There are times when taking out a loan is your best option, such as for education, a house, or any other necessity. In such cases, be sure to do it sporadically. A post by Upgraded Points on credit checks states that inquiries stay on your records for up to two years. It's advisable to wait until some of those credit check logs are removed from your file before getting additional lines of credit. Sending multiple applications in a short period signals to credit rating agencies that you may be having trouble with finances, which is why you're putting out all those requests. To avoid the scenario above, the trick is to focus on one kind of loan at a time and limit your application time window to 30 days. When I did rate shopping for student loans, for example, I made a timeline to research for two months and then send out all applications in the next month. Credit check institutions will tag these as one inquiry. Needless to say, hold off on other types of loans for the time being like those for business or housing. As you do the things above, be mindful of loan application security as well. As explained in another post here on Swaay, loan application fraud is a common scam with serious repercussions. Protect yourself by being vigilant and implementing safeguards like multi-factor authentication on your financial accounts. In doing so, you will not get unpleasant surprises when credit checks are conducted.
Manage debt properly
Having debt is not bad in itself as it's a means to build up good credit history. The problem with many people – both men and women – is the ratio of income to debt. This means your debt is piling up faster than what your income can cover. To avoid this situation, begin with a two-way approach – cut back on your expenses and pay off some of your debts right away. If you cannot cover the entire amount, make small but consistent payments. Brand Voices shared a guide on how to pay off debt fast, which includes creating a repayment plan and starting with the lowest debt you have. This will be taken into account in credit checks because they don't just examine your debt, but your payment history as well. Let records show that you're making an effort to pay back what you owe. To sum it up, you can avoid falling foul of a credit check by being mindful of your earnings, planning out your loans and credit lines, and proving you have what it takes to honor financial agreements. Applying these strategies will help you on your way to a more stable financial future., Author bio: Megan Davis When not doing her regular job as a marketing consultant, Megan Davies is helping women from all walks of life as a personal financial advisor. For the past nine years, she has been devoting her time and skills to empowering others through counseling sessions and forming action plans on wealth management.
