Tips for improving your credit score and credit rating
By Melissa Jackson
Are you struggling with past financial mistakes and trying to change your credit karma? Defined informally, karma means ‘destiny’ or ‘fate,’ and both result from a cause. When referring to your credit, karma is based on your past credit behaviour. For instance, if you made your payments on time, how much you’ve borrowed, and how often you applied for credit – in other words, your credit score or credit rating. If bad karma or credit problems have been damaging your financial future, we’ve got tips and information to help you improve your credit rating and money skills.
Personal Karma and Credit Karma – What’s the Difference?
Much like negative actions and behaviours are thought to impact an individual’s fate or personal karma, credit karma is impacted by negative financial behaviours. For example, carrying a heavy debt load, making late or partial payments, skipping payments, and/or applying for credit you don’t really need aren’t doing your credit rating – i.e. your credit karma – or financial future any favours. But sometimes the line between personal karma and credit karma can be blurred.
Take, for example, co-signing a cell phone contract or car loan for a friend with bad credit. Helping out your friend when they need it most is good for your karma, but credit-wise, if they don’t make all of their payments on time and in full as they agreed to do, your good deed can give you bad credit karma because their poor payment history will also reflect on your credit report.
When it comes time to take out a loan for a major purchase – a mortgage or car loan, for example – having a poor credit history and low credit score can make it very difficult to get the loan approved at the interest rate you can afford. You may find that your past has caught up with you and karma is making your financial future look murky.
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