How Is Credit Card Interest Calculated? - Credit Card Interest Rates

Credit is the most popular form of transaction among the consumption-oriented modern spenders. It's easy to handle, tailor-made for our wallets, and lends us that extra punch of confidence while spending. A total of 220 million credit cards were in circulation by the end of the year 2017. Nevertheless, an average credit card user has very limited knowledge about how exactly the interest on a credit card is calculated.

You might be thinking that your credit card already comes with the details regarding the annual rate of interest (known as Annual Percentage Rate or APR) chargeable, but that isn't exactly how the interest rate on your credit card is calculated. So, if the APR on your credit card is 12%, then the interest charged wouldn't be exactly 12%.

The calculation of interest generally takes your DPR or Daily Periodic Rate into consideration. DPR is calculated by dividing APR by 365, which is the number of days the card is active during a year.

Calculate Your APR

Here's an overview of how you can calculate the actual interest on your credit card:

1. Calculate Your DPR:
   
   The DPR can be easily calculated by dividing the annual percentage rate (APR) by 365. Let's say that your APR is 9%, then your daily periodic rate would be 9/365=0.025% approximately.
   
   
2. Know What Your Average Daily Balance Is
   Your Average Daily Balance is another factor which the interest on credit cards depends upon. You can start off by finding out your daily balance, which is the amount that remains unpaid on a particular date. When you're making a purchase, the daily balance goes up; when you're making payments due on your credit card, your daily balance goes down. Suppose you have an unpaid balance of Rs.500 everyday for the month of March. Your average daily balance is calculated by dividing the cumulative amount for the month by the number of days, i.e., 31.
   
   Therefore, Average Daily Balance for the month of March = (500*31)/31=500
   
   
3. Add It Up
   Finally, you need to multiply your daily periodic rate to your average daily balance, and the total amount is multiplied by the number of days in the billing period. So, if your billing period is 365 days, the DPR is 0.025%, and Average Daily Balance is Rs.500, at the end of the year, you'll be paying around Rs.4562.

Points to Remember

1. Credit card users are charged interest only when they carry a credit balance from one month to another. So, if you're paying your credit card bills on time, you wouldn't have to pay any interest at all.
2. If you fail to make your credit card payments on time, take a credit card which has a low interest rate to save up.
3. So, now you know that the interest on credit card bill fluctuates around the stipulated interest rate. One way of reducing the interest on your credit card bill is to make payments multiple times over the billing period. That way, your average daily balance will reduce and you'll end up end up paying lesser interest compared to the stipulated interest rate on the credit card.
4. If you make your credit card payments more frequently then your credit score will improve.
   

Reducing the APR

If you're someone who wishes to reduce his/her interest on the credit card bill, then you can make the payments more than once in a month in order to bring down the average daily balance. Another way of reducing the interest is to look for a special credit card for your purchases so that you can avail several rewards as well.

However, if you fail to make the payment on time, you must pay more than the minimum amount so that you're charged a lower level of interest.

Rebuild Credit Score with Secured Credit Cards - Repair Credit Report

Secured credit cards are quite popular and highly sought after. However, there are a few limitations to them too. In this blog, you’ll learn how to rebuild your credit score with a secured credit card, how to convert to an unsecured credit card, and much more.

What is a Secured Credit Card?

It is a type of credit card designed for individuals who are looking to build credit. However, it is often used as a result of lack of access to regular (unsecured) credit cards, as they haven't yet established enough credit score. It could be a supportive start for someone without any credit history or for someone trying to rebuild their damaged credit history. It is known as a "secured" card because it is secured by some money that you have to deposit against the card's credit limit. A secured credit card can safely hold your hand and guide you to a prosperous credit history.

Secured Credit Cards Vs. Regular Credit Cards

The only difference between the two is that a secured credit card is sanctioned against security (cash) deposit, which unsecured credit cards don't require. Secured cards often have higher fees than unsecured ones. You might have to pay an application fee and yearly subscription fees as well. The penalty APR could be quite high for these cards.

If you are wondering why, the answer is quite simple: a person who isn't creditworthy, is unreliable with credit. Hence lenders impose high interest rates on them. Apart from these aspects, secured credit cards are just like regular unsecured credit cards and function on similar terms.
How Do Secured Cards Work?

If you are looking for a chance to build or rebuild your credit, a secured credit card could be a suitable option for you. You just need to approach the bank and apply for a secured credit card. You should know that there isn't a guarantee of getting a secured card just by paying a deposit. Your documents will be scrutinized, and the application will be approved only when you meet the requirements of the issuer.

Once your application for a secured card is approved, you must pay the security deposit to get the card. The issuer sets a credit limit for you, which is secured with the cash deposit. After you make the initial deposit, secured cards work precisely like the unsecured ones. You can use the card wherever credit cards are accepted. As you make purchases, your credit utilization rate rises.

The card issuers report your monthly activities to credit bureaus - your credit score fluctuates accordingly. You must not assume that you don't have to pay monthly credit card bills since you have already paid a deposit. The deposit is for security reasons so that lenders don't run at a loss if you ever fail to repay your dues. Just like regular credit cards, you have to repay your credit card bill every month within the due date. If not, an APR is imposed on your outstanding balance.

You can use these cards judiciously to repair your credit report. In general, you should be careful with the way you are using your secured credit cards. You should always ensure a clean record of positive activities to improve your credit health. Use the card responsibly and pay your balance on time. In this way, you can build or rebuild your credit using the card. What more? You can gain and redeem reward points as well!

What are the drawbacks of a Secured Credit Card?

Secured credit cards seem to be the ideal solution to all your problems. But wait, is it?

Let's take look at the disadvantages of using a secured credit card.

1. There is a greater likelihood of higher interest rates.
2. Secured credit card fees are between $30 to $50.
3. It gives you a low spending limit.
4. The security deposit shall not be accessed until the account is closed.
   

How can Secured Credit Cards Improve Your Credit Score?

Secured Credit Cards help improve your credit score to a large extent. Listed below are the scenarios in which your credit score could benefit from a secured card.

1. New Users: You must be aware of the fact that a credit card is the best way to build credit; a good credit history gives you access to better credit facilities. However, if you are new to the financial world, you might not have a good enough credit score to qualify for regular credit cards. A person with a low credit score is not creditworthy in the eyes of potential lenders. Secured credit cards come of use in such a scenario. It is easier to qualify for a secured card than the unsecured ones, because you are paying a security deposit to the lender - in case you fail to repay, the lenders have a fall-back option and won't incur a loss. If you make payments on time and maintain a perfect credit utilization ratio, your credit scores will increase for sure. Once you have successfully earned enough credit score, upgrade to a regular credit card, and follow mymoneykarma’s tips to use it efficiently.
2. Rebuilding Credit: Your credit could take a severe blow due to many reasons - missed or delayed payments, delinquency, accounts in collections, repossession, foreclosure, etc. In such a scenario, your credit history would be spoilt, and you might have to rebuild it from scratch. A low credit score doesn't let you take new credit cards. How would you rebuild your credit then? Secured credit cards could be the perfect solution. It is easier to qualify for a secured credit card than the unsecured ones. If you get approval for a secured card, you could maintain a spotless credit history of low usage and timely payments to improve your credit score significantly. If your application is rejected, get help from mymoneykarma and learn. how to re-apply. Keep track of your credit score at mymoneykarma as well.
3. Improving Credit: Secured cards can come to use even though you already have good credit with endless opportunities for new unsecured cards. Let's assume that you have reached the maximum credit limit that you are entitled to, yet you wish to increase your credit limit by another Rs.2,00,000. Unsecured credit cards might not help you here as your request won't be approved, but secured ones definitely will. You could make a security deposit of Rs.2,00,000 and reap the benefits of a bigger credit limit.

How Do I Convert to an Unsecured Credit Card?

If you maintain a steady and clean credit history, your secured card can be considered for an upgrade. Most issuers have their terms and conditions which you need to qualify to upgrade. If you maintain a history of timely payments and low credit balance, you are more likely to get an upgrade soon.

A few secured credit card issuers review your account after a year of usage and upgrade you to a regular card if you meet the requirements. For some cards, you might have to apply for an upgrade. Once you have reached the target credit score and successfully improved your credit history, you can apply for a new unsecured credit card with another credit card issuer.

How to Fix Credit Report Errors - Dispute Error On Credit Report

Why Would Your Credit Report Have Errors?

Here's what happens. Every month, your lenders and creditors send details of your loan account to one of the three major credit bureaus, namely Experian, TransUnion, and Equifax. These are the organizations that ultimately create and update your credit report.

There can be errors in the calculation for a number of reasons. These mistakes can include reportings from accounts that are not yours, inaccurate transactions, payments mistakenly reported as being made late, and much more.

You need to ensure that the credit account records are accurate. This brings us to the next question...

How Do You Locate These Errors?

Now, if you wish to check for credit report errors, the best thing to do is to check your credit report. Remember the credit bureaus we named above? All of those give you a credit report once a year, for free! This means that you can check your report thrice a year. Additionally, if you have been turned down for loans etc. due to your credit score, you can get one more free credit report.

If you are not able to get these reports for free, don't worry. You can buy these from the bureaus for a sum of Rs.550 - Rs.1400.

Study the report from a bureau each quarter and compare them at the end of the year to identify discrepancies or mistakes.

Now that you have learned how to spot mistakes, let's see how you can dispute credit report errors.

Common Credit Report Errors

Common errors that are disputed are:

1. Accounts that don't belong to you
2. Payments reported late while they were made on time
3. Wrong loan amount/credit limit/account balance
4. Wrong creditor
5. Incorrect account status
   

Dispute Errors on Your Credit Report

You may have thought that you can dispute all credit report errors. Technically yes, but that does not necessarily mean that a change will reflect accordingly.

While you do have the provision to dispute anything in the credit report, the credit bureaus shall still investigate and only remove items that they are authorized to remove. Issues you can dispute are those that are incomplete, inaccurate, out of date, or unverifiable.

Here are a few points to remember: negative items remain on your credit report for seven years, and bankruptcy remains for ten years.

If you have had any negative items for longer than seven years, then you can confidently dispute it as a credit report error.

What You Can Do When a Credit Bureau Will Not Fix an Error

Credit bureaus are required by law to report to an inquiry within 30 days. If you send additional documents after that, the period for the bureaus to respond becomes 45 days. If they do not answer, you can sue them in court.

However, there are things in your credit report they are not liable to remove. For instance, bankruptcy can't be removed before a period of ten years is up.

Disputing Errors - the Process

You can place complaints against credit report errors in three ways: through mail, online, or by phone.

Dispute Credit Report Errors Online

While this way is convenient, it is not without its drawbacks. You get to check the status of your records and the dispute only online.

When you dispute credit report errors online, you get results online only. To do so, you must provide your confirmation number. However, one cannot complete the process entirely online - you still have to mail the required documents as proof.

Dispute Credit Report Errors by Mail

Getting results this way will take more time, but there are many benefits. For one, when you communicate by real mail, it leaves a paper trail. Since the credit bureaus need to respond to you within 30 days, you can be sure of a response. In case they don't, you can sue the bureau in court.

For disputing through mail, you need to write a letter with information regarding which item should be removed and why. You should include proof of the error as well.

Disputing Through Phone

You will usually find a number in your credit report to use for disputing errors. Use it. Also make sure that you remember when you made the call, whom you spoke to, the information shared, the nature of the dispute, and the proof submitted.

It may happen, however, that you may need to contact the concerned credit bureau for more information.

Documents Needed as Proof

Here are some of the documents that you are expected to submit in case of disputes:

1. Proof of name, address, date of birth, and PAN card number - in case they are provided incorrectly in reports,
2. Copy of driver's license
3. Your recent statement from the bank
4. Your PAN card number
5. A canceled check to show you paid bills on time
6. Billing statement to confirm your credit card balance

DIY Credit Repair - Improve Your Credit Score

Ravi had applied for a loan, but his application was rejected due to bad credit. Ravi didn't know what bad credit means. Although he tried to understand it from a bank executive, all Ravi could find out was that he needed credit repair.

Hence, to help Ravi and others like him, mymoneykarma explains the concept of credit repair and provides DIY (Do It Yourself) tips for the same.
Poor Credit Score

A credit score is a three-digit numeric that banks and other financial institutions consider determining the credit-worthiness of an individual.

On a numerical scale, a good credit score lies somewhere between the range of 700-800. On the other hand, if you have a credit score below 600, it’s high time that you ask yourself why you are within the ambit of poor credit.

How Does One Land in Bad Credit?

    A large number of missed payments - You may have missed some credit card or EMI payments in the past, due to which your credit score has decreased.

• High credit utilization rate - Credit utilization ratio = Credit card spending/credit card limit.
• If you spend more than 30% of the credit utilization limit, it reflects that you are credit hungry, and this can be the reason for a slump in your credit score.
• Multiple credit accounts - In case you have various credit cards and loan accounts, then it indicates that your debt to income ratio (DTI= Individual's monthly debt payments to monthly gross income) isn't maintained and you fulfill your obligations by borrowing money from several sources.
• Errors in the credit report - A credit report is a detailed document that comprises a consolidated record of your finances, such as credit card bill payments, EMIs, etc. which the banks provide to the credit bureaus. Thus, if you haven't checked your credit report for a long time, there is a possibility that at least some errors have gone unchecked in your credit report.

What Happens When You Have Bad Credit?

Disapproval of loan/credit card applications

Based on the credit score, lenders decide whether to take the risk of providing you with a credit or not. Thus, if you have a poor credit score, there are higher chances of rejection from credit card issuers, banks, and NBFCs.

High interest rates

Even if some lenders approve you for credit, they would compensate for the risk by charging a high-interest rate, which could put you in a huge debt trap.
DIY Credit Repair Tips

Credit repair is a process through which one’s credit score can be improved. It can either be done on your own or with the help of an expert, be it a qualified individual or an organization.

However, remember that it's not a one-day process and will take at least 6-12 months to show improvement. Now, if you choose to DIY, the following are the tips that you need to consider:

Monitor your credit report

With the significance of a credit report explained above, it is evident that you have to make sure that you check your credit report regularly. If you are thinking about where to get this report from, mymoneykarma is the answer. Check your credit report for FREE through our intelligent finance tool.

Once you check the report, if you come to notice errors, rectify them immediately by reporting to the credit bureau or the lender, depending on the severity of the mistake.

Clear your missed payments

In case you missed a few payments because of non-receipt of statements or forgetting the due date, don't think that clearing them will go in vain. Maybe your credit score will slump in one quarter, but as you pay the due amount, it will show a rise in the next quarter. Also, be diligent in paying the rest of the bills or EMIs, as that will maintain the lender's trust in you.

Beware of a hard inquiry

A hard inquiry is generated when you apply for a new line of credit. Thus, until your credit score improves, it is advisable to not apply for a new one, be it a credit card or loan. Even if you have a good credit score, too many hard inquiries can definitely affect it.

Resolve a dispute with the bank or other lenders

If you have missed or delayed payments due to a dispute with the credit card issuer regarding APR (Annual Percentage Rate) or any hidden costs, then resolve it to save your credit report from further negative remarks.

Buy a secured credit card

A secured credit card is designed for people who are looking to build their credit score. It is issued against a security deposit that you have to make for gaining access to the offered credit card limit.

The activities on this card are reported to credit bureaus, and the credit score fluctuates accordingly. However, remember that you still have to pay your credit card bills on time for the card to be of any benefit.

Dangers of Using Credit Cards - Risks Involved in Credit Card Use

Planning to get yourself a new credit card?

Scared about its potential dangers?

Many people opine that credit cards are dangerous. New credit card users can easily get swayed by the offer of "free money" that credit cards bring along and lose control of their expenditure. Even experienced users often end up in credit card debt. It is of prime importance that you understand the potential dangers that accompany your credit card subscription and learn some smart techniques to keep yourself safe. Read ahead to know how you can cultivate responsible credit card habits.

The Infamous Credit Card Debt

Credit card companies are not exactly your best buddies. They don't give you "free money." They are neither very generous when they tell you that you need not repay the entire borrowed amount within the billing cycle. These offers are so lucrative that we fail to realize the harsh consequences. We tend to borrow a lot more than required a lot more than we can afford to pay back. There's a larger game at play here, which might as well be beyond your comprehension.

Let me elaborate with an example. Say you have a credit card with a credit limit of Rs.1,00,000. That doesn't mean you should spend it entirely. Let's say you have spent Rs.30,000 and your credit card company tells you that if you repay a small amount of Rs.3,000 fn the current billing cycle, you're good to go. You feel overjoyed and pay the nominal amount. You don't realize that a huge rate of interest will be applicable on the remaining Rs.27,000. You might be spared of the burden of paying big bucks at the moment, but you'll end up paying more than you had originally borrowed. Also, if you get into the habit of procrastinating your payments every month, you will inevitably fall into credit card debt.

Lessons learned:

• Don't be a spendthrift. Spend responsibly. Avoid spending more money than you can afford.
• Repay the entire credit balance accumulated in each billing cycle.
• Create a monthly budget for yourself and strictly adhere to it.
  

Missing Your Payments

Missing a payment can be a stumbling block. Your payment history greatly affects your credit score; and if you fail one, you are sure to suffer. Your credit score will drop, you will have to pay a late fee, and you might also have to pay a high-interest penalty (penalty APR). If the payment is delayed by 30 days, your card-issuing company might report the incident to the credit bureaus, messing up your credit reports for up to seven years.

Lessons learned:

• Never miss a payment
• Set up automatic payments
• Set up text/mail/phone reminders for yourself
  

Carrying Forward Your Credit Balance

As we discussed a while ago, credit card companies usually give you the option of paying "just a nominal amount" every billing cycle instead of settling the entire loan. If you do this, you carry forward a balance to the next month. If you keep doing this every month, the amounts accumulate to form a huge debt. This money can incur a significantly higher rate of interest. And we all know that credit card interests can be notoriously high.

It is important for you to understand what the APR is. It stands for Annual Percentage Rate. It can go up to an incredible high of 16%. If your credit score is low, the APR can be even higher. A penalty APR applies to the due amount when you fail your payments, and is higher than the standard APR.

On the other hand, if you repay your entire credit balance within your billing cycle, you are spared from paying these high interests.

Lessons learned:

• Make payments on time
• Repay the full borrowed amount within each billing cycle
• In case of exigency, apply for a balance transfer card - a loan facility that helps you settle a high credit balance at a lower interest rate
  

Too Many Credit Cards to Handle

As you apply for a new credit card, the issuer checks your credit score. This checking qualifies as a hard inquiry. You surely do not want a lot of hard inquiries on your plate, as it affects your credit score. They also turn up in your credit report. Too many hard inquiries show desperation on your part, and the lenders would doubt your creditworthiness.

You need to decide which credit card you actually want, and avoid applying for many. Simultaneously, you could try to assess which cards you would get an approval for and apply accordingly. You might also lose track of your cards if you have multiple ones, resulting in missed payments or auto-cancellation of cards that are inactive. All these can lead to a drop in your credit score. The aim is to ensure that you keep a firm grip on your cards and your expenditure and do your best to maintain a high credit score.

Lessons learned:

• Avoid applying for too many credit cards at once.
• Research well before applying for a new credit card.
• Think and choose reasonably before applying for a new credit card - don't apply for one that you're unlikely to get.
• Some online financial tools and apps compare your credit profile with that of others and assess your chances of getting a particular credit card. You could consider trying one of those before applying for a new card.

Controlling Your Credit Limit Usage

The bank might give you a high credit limit, but you're expected to spend only up to 30% of it; or else your credit score takes a hit. The ratio between your expenditure and credit limit is called 'Credit Utilization.' Lenders judge your creditworthiness through this ratio - if you spend too much, you might not be able to repay; hence it is risky to lend money to you.

If by any chance, you have a high credit utilization ratio, credit issuers will either refuse a new credit card for you or approve a credit card with a high rate of interest.

• Keep your credit utilization under 30%.
• Put yourself on a budget and control your expenditure.
• If your credit utilization exceeds 30% regularly, consider applying for an increase in credit limit.

Credit Card Limit Increase - How To Increase Credit Card Limit

Well, the drop in your credit score could be the result of several reasons; one of them being a high credit utilization rate. If that is in fact the case, increasing your credit limit can definitely help push your credit score forward.

What's a Credit Limit?

The credit limit is the absolute maximum outstanding amount that your credit card issuer lets you borrow. Every time you purchase with your credit card, the purchase amount is added to your credit card balance, which cannot exceed the credit limit. Keeping your expenses well within the credit limit is vital both to avoid a debt trap and to build a good credit score.

Why Would You Want a High Credit Limit?

There are three primary reasons why you may want an increase in your credit limit:

To obtain more credit for making purchases - Your existing credit limit might be too low to cover a planned purchase or an expensive gift. A higher credit limit will help you to make more purchases easily, thereby allowing you to reap the benefits of credit card reward points.

To get more credit during an emergency - An emergency in the form of anything - last-minute plane tickets home to car repairs - might knock on your door at any hour. Although you might want to use your emergency fund for every rainy day, a credit card can come in handy as well. The higher the credit limit, the more funds you can access to support yourself through a difficult situation.

To lower your credit utilization rate - Your credit score is profoundly affected by the amount owed (especially when it goes above 30% of the credit limit). The amount that you owe determines your 'credit utilization rate.' Hence, an increase in your credit limit can surely boost your credit score and take care of your financial health.

How to Request an Increase in Credit Limit

If your lender is not willing to increase your credit limit, proceed with caution. The strategy of asking upfront can backfire and eventually become the reason behind the dip in your credit score. So, plan well before you request for a higher credit limit.

The reason why a request can hurt your credit score is that the request will lead to a hard inquiry. A number of hard inquiries on your credit report might make you look desperate for credit, thereby landing a blow to your credit score. With that said, sometimes it also makes sense to request a credit limit increase. Although your credit scores might dip temporarily, it will eventually improve if you have a plan in place for prompt repayment.

How to Prepare Yourself for It

Here are a few things that you should keep in mind:

Timing is key - It is always a good idea to wait until you've got a good credit track record or a stable income. As odd as it may sound, the best time to ask for more room in your credit line is when you need it the least.

Keeping your credit score stable - As discussed above, a request to raise your credit limit could initiate a series of hard inquiries on your credit report. So, avoid applying for many lines of credit all at the same time.

Evaluate the reasons before applying - Make sure that you are not asking for a higher credit limit on just a whim or impulse. The best reason to have is that you're trying to keep your credit usage low relative to your credit limit.

What Are the Dangers of Maxing Out on Your Credit Limit?

Your Credit Score Can Plummet - A higher credit limit can tempt you to splurge, resulting in a higher credit utilization rate. Maxing out on your credit card/(s) is much worse, and can totally derail your personal finance as your credit score drops considerably.

Lenders Might Not Approve of It - Maxing out on your credit limit could put you at risk of lenders considering you irresponsible. It might just start with rejection on your loan application, and could extend well beyond. So, try to keep your credit card expenses well under check.

You Might Fall into a Debt-Trap - Maxing out on your credit card can put you a step closer to deep debt. Although you may plan to repay the balance soon, it could take years to repay, which often leads to a vicious cycle of interest accumulation and repayment.

5 Tips To Know Before Getting Loans In 2021

It may not be easy anymore to get a loan. Lenders are becoming stricter, especially due to the current economic conditions. And yet, people’s difficulties and therefore their desire for loans are increasing.

One may need a loan for just about anything. It can be for children’s education, debt consolidation, marriage, car purchase, property purchase, equipment purchase, and more. It can be anything, and yet the fact remains that there is a great demand for loan right now. You may need money urgently, but lenders may not want to give you anything, for any reason.

To increase your chances of getting loans, here are a few tips:

• Check the loan eligibility before applying: Here’s a big mistake many people make. They don’t see the lender’s eligibility criteria and apply for the loan. Some understand that they are not eligible, but apply anyway just to get a chance, which never comes by the way. It is simple. If you do not meet the criteria, you don’t get the money. Worse, it can harm your credit score too due to a loan enquiry and denial.
• Check your credit score before applying: Lenders want your credit score beyond a certain level, without which your loan application stands to be denied. Your credit score is a measure of your credit worthiness and how trustworthy you are in repaying credit. Your credit is important as it is based on previous loans, income, assets, repayment behaviors, and more. The score needs to be at least 700 to be considered.
• Don’t apply for too many loans at once: This is another big mistake people make in their desperation to get emergency money. They apply at too many places at the same time. This, however, lowers your credit score, and banks can even deny you loans if they come to know you are asking at multiple places.
• Multiple applications mean multiple rejections, since it signifies lack of ability to repay the loan and lack of confidence. The best thing to do is to research about a few lenders and pick the one who suits you most.
• Correct errors in your credit report: You can see your credit report free once a year, and the cost afterwards is negligible. Studying the report will let you come across any mistakes. Mistakes and misstatements affect your credit score, and therefore many things in your life. Therefore, take your time to study the report. If you find mistakes, inform the concerned credit bureau. It’ll correct your report.
  

In case of rejection, don’t apply before 6 months: This is a common mistake as well. Right after a loan application rejection, people apply for another. The problem? It lowers your credit score, which in turn makes it harder for you to get credit later on.