How Well Do Your Understand Your Credit Report?
You doubtless know only too well that the information that is contained in your personal credit report is used by the loan and credit card companies when considering whether or not to extend credit to you, but do you know just what information your personal credit report contains? For instance, did you know that the details contained in your credit report could affect whether or not you are able to buy a new home or will need to remain in your current ‘shoebox’?
In many cases people believe that when a credit card company or other lender looks at your credit report they are simply looking to see your credit score and, although this is certainly one thing that they do look at, they are also looking at far more. Above all, lenders are looking at how much debt you have in comparison to your income and even reasonably small accounts, like those with a mail order catalogue company, will be considered as a deduction from your income when it comes to considering a loan application.
If a lender sees that you have more money going out than you have coming in then your loan request will automatically be turned down. Actually, by law a specified percentage of your income must be available to meet loan payments before the lender is permitted to approve it, whatever the reason for the loan.
Lenders will also be looking back at your credit history over the last seven years to see how well you have handled loans in existence during that period. In particular, they are looking at whether you have made your payments on time and will play close attention to any payments which were more than thirty days late. It may not have seemed particularly important to you when you ran into a few problems and were late making payments for a few months on one of your accounts, however a lender will certainly consider this when determining the risk of lending to you now.
Lenders will also see whether any of your accounts have run into debt over the past seven years and if these debts have now been paid off. If there are outstanding payments on a current agreement credit card companies and other lenders will be very wary when it comes to extending you further credit before these are cleared.
Finally, your credit report will show whether you have filed for bankruptcy, normally within the last ten years. Some people think that a company is far more likely to lend to you if you have filed for bankruptcy as they enjoy the added protection of knowing that you are not permitted to file again for several years. This however is not the case and filing for bankruptcy is viewed by lenders as a red warning flag showing that you have already shown a tendency to get yourself in over your head when handling your finances.
Your credit report is an extremely important document and one which you should not only understand but that you should review occasionally for your own protection and peace of mind. Happily, the law states that you must be sent a copy of your credit report once a year if you request it and the first thing that you need to acquaint yourself with is how to obtain your free annual credit report. Having gotten your report you then need to study it with care to make sure that it is accurate and to ask for it to be amended if it is not. In addition, there are certain circumstances in which you can ask for alterations to your report, even if it is correct, and here you will have to have the answers to hand for such questions as how can I remove a judgment from my credit report?
