What kind of credit risk are you?
Whether you're buying a car, opening a credit card or seeking a home loan, a lender will look into your credit history before rewarding you -- or not -- with new spending power.
Lenders recognize that there is always a chance of default, and that potential danger is called credit risk.
Determining your credit riskIt's a good idea to begin building a strong history at an early age to take advantage of the benefits of your good credit. There are many rewards associated with being a low threat to your creditors, including better mortgage rates and access to exclusive credit card programs.
How credit risk affects your interest ratesThe higher the credit risk, the higher the interest rates will be. The majority of credit cards have variable terms with rates that rely on an applicant's creditworthiness.
Lowering your credit riskIf your credit report shows negative activity and late payments, chances are you will need to do some work to boost your credit score. While some bad marks will remain on your credit report, there are many ways to improve your score and lower your credit risk. The first step to making yourself look more appealing to potential creditors is to regularly pay your bills on time.
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Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.