subject: What You Should Know About Credit [print this page] What is an unsecured debt? Unsecured debt is easy to remember, here is how, just think of your mortgage or a car as a secured loan and everything else as unsecured. You need to look at your credit report and see how many credit cards you have and exactly how much credit is given on those cards. You may have two cards totaling $2,000 of credit limitthis makes you less attractive to a credit company than someone else that has two credit cards totaling
$20,000. You will need to build this up quickly so you can to make it easier to borrow
in the future and have a good credit rating.
Debt-to-credit ratio, the next major contribution to a good credit rating is your debt-to-credit ratio. This allows future lenders to see exactly how much you have borrowed in the past and at how much interest each time. This will obviously let them decide if they should lend to you and how much they should lend in total. Your debt-to-credit ratio is calculated in percentages.
For example, if your debt-to-credit ratio is 50%; this means you have borrowed and then paid back half of what you owed. If you have an 80% debt-to-credit ratio, this means you have borrowed less than what you have as debt. You need this ratio to be around 1030% at any given time.
If you use credit cards efficiently, then they can be very useful in your fight against the credit companies and the way in which they rate you. Think about it: Credit cards are relatively easy to get and you may get a credit limit of $5,000 on your very first card. Now if this happens, your high credit limit, as discussed above, has just gone from 0 or very low to $5,000 just like that! Now say you already had a high credit limit of $3,000well done,you have just raised your high credit limit up to a staggering $8,000!
by: Jim Atman
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