Good Credit, Bad Report?

You’re not sure exactly what your credit score is, but you know it’s pretty solid. After all, you pay all your bills, and you always do it on time, one of the single best things you can do to cultivate good credit. You have no hint of bankruptcy or foreclosure in your history, yet every time you apply for credit, you get the financial equivalent of the stink eye. What gives?

There may be an undertow lurking just below the surface of your credit score that’s scaring away lenders. What could it be? Here are a few things to look for:

Credit cards galore?
There should be no problem if you open a new credit card. One. Now if you open three or four accounts in a short time, it sends up a storm warning to creditors. This scenario points to desperation. If you’re asking every Tom, Dick and Harry for credit, the powers of lending are very apt to think something is going on with you, and not something good.

Co-signer caution
Acting as a co-signer is a nice gesture, but did you know this gesture puts the entire loan debt on your credit report as well? In the eyes of lenders, you share the loan amount equally with your partner in debt. This debt will show up on your report when a lender checks your record, and if your partner defaults, pays late or misses a payment, that behavior can very likely be reflected as YOUR behavior.

Minimalist
Do you make a habit of making minimum payments on your credit card balance? While those who give you credit love when you carry a balance and put off paying it in full, consistently making the minimum payment turns off lenders. They see a person who may be having trouble paying off debt. Few lenders want to take on that risk.

Inappropriate advances
Nothing gives off the smell of desperation more than numerous cash advances against your credit card. Because the interest rate is usually higher for cash advances than credit card charges, lenders see you as “robbing Peter to pay Paul”. Many large card issuers have their own credit scoring systems that apply penalties for cash advances. While that behavior may only affect business with that lender, the issuer could cut your credit line or cancel your account altogether, which could affect your relationship with other lenders.

As you can see, the shiny façade of a solid credit score can have underlying structural damage. Lenders want to be sure you’re a good, safe risk before they lend you money. This is especially true after all the financial difficulties of the recent economic downturn. So if you’re being turned down by lenders even though your credit score seems good enough, one of the above scenarios could be the reason.

If you’re having budgeting problems that are leading you to trigger a lender’s red flag, or just have concerns about your personal finances, Vantage offers members free financial education and counseling services through Accel. Help is just a phone call away!