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Credit scoring and how it affects your ability to get a credit card..

Credit Report: Learn The Basics

Your credit report is a record that will follow you throughout your life. It can affect your life in many ways beyond the immediate and obvious concern of whether you can get a credit card, car loan or mortgage. Potential employers and landlords, as well as others, such as insurers and utility companies, can look at your credit report, using it as a factor in their decisions relating to you. Thus, it is in your interest to understand how this important collection of information, your credit report, works.

The Bottom Line: Credit Score

The term credit score refers to the number assigned to represent your credit history in a sort of short hand. This number is the result of complex calculations, with numerical values given to certain sorts of fiscal behaviors, allowing the arrival at a single number to represent credit worthiness. There are three main credit reporting agencies, using separate but very similar formulas, which is why those three numbers are usually similar, and those numbers are averaged to generate the single credit score. Traditionally, the FICO score has been associated with the credit reporting agency Experian, the Beacon score with Equifax, and the Empirica scores with Trans Union.

Be In The Know

Thanks to consumer protection legislation, such as The Fair Credit Reporting Act, you have a right to view your credit report and to have errors corrected and disputed claims confirmed through investigation, and removed if it is revealed that they are without merit or unable to be documented properly. Therefore, it is important to be in the know when it comes to your credit report.

You can generally receive a copy of your credit report for less than ten dollars, and there are numerous circumstances that entitle you to a free copy, once a year. Among these are being denied for credit, suspecting that there may be mistakes or instances of illegitimate use of your name and credit, being unemployed, but seeking work, and being on public assistance. Some states have legislation in place that entitles all of their residents to a free yearly report. With all the available free and low cost options with which to view your credit report, it only makes sense to protect your credit score by periodically making sure it is accurate.

What You’ll Find There

Naturally, you’ll find your basic personal information, such as your name, your social security number, your current and past addresses, and your employment information. These should be checked for errors, as it does happen sometimes with similar names in the family or the general public, mistakes can be made. You’ll find your credit history, in great detail – lenders, terms, payments, defaults, and so on – for each credit account or loan that you’ve had. It is especially important to take the time to make sure that each and every bit of this information is accurate, especially with the rise of identity theft and credit fraud. Any errors should be addressed promptly and accounts that are no longer used should be formally closed. Wrapping up the credit report will be a listing of inquiries, of who has asked to view your credit report, during the past two years.

In The Event Of An Error…

If you find that something is inaccurate on your credit report, you are, by law, entitled to an opportunity to have the matter addressed by the credit reporting agency and changed, if merited. You can make your request to the credit reporting agency that is responsible for the report by telephone or in writing, though the best way is to do so using both means. Once you’ve made your concerns known formally, they are obligated to investigate the matter and either confirm the information or remove it within 30 days. You will receive documentation of this procedure, as well as a new copy of your credit report if the investigation has resulted in a change, within 5 business days of its conclusion. In addition, you have the right to add 100 words of explanation concerning a particular credit incident to your credit report. It is a reasonable and fair system, if you know how to use it.

The Past Is The Foundation Upon Which The Future Rests

And, that is particularly true in the eyes of lenders, which is why it is so important to make sure that your credit report is an accurate portrayal of your credit and financial history. A poor credit report can make lenders hesitant to deal with you, while high credit scores can pave the way to real opportunity.

Taking care of your credit report involves fulfilling your credit obligations, keeping a careful watch for errors and addressing them as soon as possible after discovery, and avoiding action that may look risky, such as numerous credit applications that can make it look like you are being turned down frequently. Having an excess of open accounts can look risky, even if you are keeping up with all of them. That’s because your ability to suddenly take on a great deal of debt can make a lender a bit hesitant, as that could potentially interfere with your ability to meet your repayment obligations to him.

While the past does influence the future in the world of credit and finance, if you’ve made mistakes in the past, all is not lost. Your positive credit and finance behavior is also included on your credit report and, if you start today to make a new and more organized start, you credit report will announce your efforts to the world of lenders, who will, with time, take notice and allow you the opportunity to prove yourself further.

While, indeed, your credit report does follow you through the years, as you gain in fiscal knowledge and maturity, you do have increasing power to determine a great deal of what it says about you. With a good understanding of your credit report and how to make it work for you, instead of against you, you can greatly improve your quality of life, present and future. Request a copy of your credit report today and start making the financial changes that will help you to reach your lifestyle goals.

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