Guard Your Credit With Your Life!

Watch over it like a hawk, keep a close eye on it and never let it out of your sight.

To banks, building societies and mortgage providers how they treat you will ultimately depend on your credit score. If you have a high score they’ll look after you, allowing you to borrow the amount you want when you want. If  you have a low score you’ll be made to feel like an outcast.

I remember one gentleman was shocked when his mortgage application was rejected. The mortgage lender saw one missed catalogue payment from over 3 years ago, and this ruined his chance of obtaining lending and lost him his dream home. I felt really sorry for him. Please don’t let that be you!

Having a missed payment can blacken your credit forevermore.  If you do drive, do you remember the day you got your licence? Didn’t it feel like your ticket to independence, freedom and a better life? (It did for me.) Your credit is a bit like that licence, it that will help you purchase the things you need in the future such as a car, house etc. Without it, you deliberately make your life difficult.

The next thing to remember is choose carefully what you spend your money on. If you’ve read Rich Dad, Poor Dad you’ll know to ‘only borrow to invest in income producing assets.’ I have a friend who borrowed 30k to buy her dream car, it devalued as soon as she left the show room. She then had finance payments to make up over a 5 year term which took up a sizeable portion of her income, leaving little for rent/ food/ bills etc. When she was finally ready to jump on the property ladder, due to the huge debt wrapped around her neck and little savings in the bank she could only dream about it.

 I could easily have shown her how to use the same 30k to buy 5 properties in 3 years, with each property giving her a minimum of £300-£500pm. She could have used this monthly income to purchase an asset such as a car, or save to buy another property, perhaps put her kids in private school or even help to quit her job. Remember unless your assets pay for your liabilities, they’re not a good investment. Be smart with your money.

In this climate lending is a lot more difficult to obtain than it used to be. Banks aren’t lending to each other as easily, just look at the latest interbank lending rates. Many buyers can’t get lending and therefore have stopped buying. Those who made good decisions with their money and have good credit can take advantage of the market downturn and make cash. A buyer’s market is defined as a market where buyers are scared, and people need to sell. The buyer with a good credit score will be in a position to make money, those without will miss out.

Look after your credit and it will look after you!