One of the most important reasons to maintain an excellent credit profile is to qualify for the best available terms for the credit products you need. Credit products is a fancy term (and slightly more inclusive, but we’ll gloss over that) for “loans” so we’ll focus in this section on four major types of loans:
In general we refer to these products as loans because they include the following attributes:
- Being approved by the financial company that will provide the funds on the basis of income (capacity to pay) and credit profile.
- Having a set agreement on repayment between the borrower and the financial company
- Having the payment performance by the borrower reported by the financial company to the credit bureaus.
Lenders will generally want to see some history on your credit report of other companies providing you credit before they will do the same, although someone will need to be first, so usually that first lender will offer less advantageous terms to someone with no credit history. But the good news is that within a matter of months good performance in paying your lenders on time and staying current can lead to qualifying for other credit products and loans with better terms.
Click on the links above for more information on each type of loan outlined above.