Some have tossed around the idea of a credit blacklist, which would mean that companies are actually blocking you from getting the credit that you deserve. The idea of being automatically shut out of the credit you need for the bigger things in life can be scary, but that doesn’t mean that it’s true. Simply put, the good news that you need to hear right here, right now is that there’s no such thing as a credit blacklist. What gets people confused is that creditors do not have to accept you. They have to look at your credit file before deciding whether or not you are a good credit risk.
Yet it gets deeper than that. They can look at how much money you’re going to bring to their coffers. If you’re someone that pays your credit card bills off every single month without drawing any interesting…guess what? You’re not going to be giving them the revenue that they’re looking for. Would you? If you honestly had two people and you knew that one wasn’t going to make you any interest back on the money that you let them borrow while the other will give you a good 10%… you would be silly to go with the one that gets to borrow your money for free!
That’s what you’re doing when you sign up for a credit card to begin with. You are totally and completely borrowing someone else’s money to pay for the things that you feel you need right away. Whether we think that it’s right or wrong doesn’t make any difference. The point here is that you have to start looking at what type of credit customer you are.
There’s nothing wrong with paying your bills on time. In fact, we would recommend that you always pay your bills on time. This will give you the best credit score possible. But you do need to stared thinking about utilization and how you want to make that work. If you’re not focused on utilization at all, you’re going to end up having a really tough time getting anything done. Utilization is simply the percentage of money used on the card. If you have a credit with a 1000 GBP limit, and you use 250 pounds, that’s going to be a card with a 25% utilization. That’s not bad at all.
On the other hand, if your card is at the 800-900 range, that’s a lot of utilization. It makes lenders nervous that you’re racking up debt that you aren’t going to pay back. As you get better with your finances, you will be able to handle this in a completely different way. You will be able to save money so that you don’t run the risk of having to lean on your credit cards. Now, what happens if you really do hit some rough patches? You will need to make sure that you take things to the next level through getting past the situation as quickly as possible. No one says that life doesn’t move in pretty uncertain ways. But you do need to make sure that you can roll with the punches. If you just glide through life like nothing happened, you run the risk of ignoring glaring situations that can become problematic for you over time.
Don’t let life get to you like that. Embrace credit, and learn how to use it well. What purpose does credit really have in your life? We’d love to know, so don’t hesitate to tell us all about it in the comments!