Posted by: islamicfinancingnews | June 24, 2012

Good Credit Can Increase Your Islamic Finance Options

Despite a sporadic recovery in the U.S. housing market, mortgage rates for 30 year fixed loans have declined to record levels, reducing borrowing costs even further. One way to take advantage of lower rates and make it easier to qualify for Islamic mortgages is to fix bad credit.

One of the most practical ways to fix your credit is to stop using credit cards for items you can’t afford. The premise is simple. If you can’t afford to pay for something in cash, don’t use your credit card. In fact, you should only use a credit card when you have the money to spend but a cash transaction isn’t allowed such as at many hotels, or when you order something online, or when an ATM machine is inaccessible. By using a credit card responsibly, you can build a good credit rating.

It’s also important to pay off credit card debt. Get in the habit of making more than the minimum payment owing on your credit card bill each month to pay off the total debt faster and make sure to make these payments promptly. Often, bad credit has as much to do with late payments as it does with overextending your credit limit.

Establishing good credit allows a mortgage lender security in their financial dealings with you and will allow you to qualify more easily for a new mortgage or refinance your existing mortgage. Talk to your lender about the various Islamic loans free of Riba that can help you with your finances.

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