Understanding Your Personal Credit Report
You probably know all too well that the information which is contained in your credit report is used by the credit card and loan companies when considering whether to extend credit to you, but are you aware of just what information your personal credit report contains? For example, did you know that the details that are contained in your personal credit report could determine whether or not you can purchase a new home or will need to remain in your present ’shoebox’?
Many people believe that if a lender looks at your credit report that company is simply looking to see your credit score and, while this is definitely one thing that they do look at, they are in fact looking at much more. Most especially, they are looking to see the amount of debt you have in comparison to your income and even relatively 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 credit card company, bank or other lender comes to the conclusion that you have got more money going out than you have coming in then your loan request will automatically be turned down. Indeed, by law a specified percentage of your income must be available to meet loan payments before the lender can approve it, regardless of the purpose of the loan.
A lender is also looking at your credit history for the last seven years to see how you have handled any loans during that period. Specifically, they will look at whether you have made your payments on time and will play close attention to any payments that you made more than thirty days late. It might not have seemed particularly important to you when you got into difficulty and were late with your payments for a few months on an account, however, any new lender is certainly going to take this into account when assessing the risk of lending to you now.
A lender will also look to see whether any of your accounts have run into debt over the last seven years and whether these debts have now been paid off. If you have outstanding payments on a current loan agreement credit card companies and other lenders will be very wary about giving you further credit before these are paid off.
Finally, your credit report will also show whether you have filed for bankruptcy, generally within the past ten years. Some people believe that a company is much more likely to advance you credit if you have filed for bankruptcy as they have the added protection of knowing that you may not file again for several years. However, this is not true and filing for bankruptcy is viewed by lenders as a red flag showing that you have already demonstrated a tendency for getting yourself in over your head when it comes to managing your finances.
Your personal credit report is an important document and one which you ought not only to understand but which you should review occasionally for your own protection. Happily, the law states that you must be sent a copy of your credit report once every year on request and so the first thing that you ought to acquaint yourself with is how to obtain your free annual credit report. Having obtained your report you then have to study it with care to ensure that it is accurate and to request that it be changed if it is not. Further, there are certain instances in which it is possible to ask for alterations to your credit report, even if it is accurate, and here you will have to have the answers to hand for questions like how can I remove a judgment from my credit report?
